Mr English was yesterday elected leader of the National Party and became New Zealand's 39th prime minister. His deputy is Paula Bennett.
Mr Timms said Mr English, formerly the finance minister, was well regarded by the business sector and investors both in New Zealand and offshore. He represented stability and reliability.
``However, we would expect political uncertainty to grow during 2017, reflecting higher potential for a change of government at the next election.''
National won 47% of the vote in 2014, giving the party 60 seats, just short of the 61 needed to govern alone, he said.
National received one vote from United Future and one from Act New Zealand and two from the Maori Party.
If former prime minister John Key's personal popularity was worth somewhere between 1% and 5%, National could easily slip to somewhere in the mid-40% range for the next election.
While that would still put National way out in front as the most popular party, under MMP it would fall well short of being able to govern with existing partners.
A change of government would not derail the economy but it could mean some change in key areas of policy difference, such as housing, Mr Timms said.
``It would also mean more uncertainty and volatility, given how comfortable financial markets and investors have been with Key and English for close to a decade.''
Westpac acting chief economist Michael Gordon said Mr English was likely to maintain his relatively conservative approach to fiscal management.
The loss of a ``fairly popular'' political leader in the run-up to an election did add an additional layer of uncertainty to the outlook.
At the margin, it had raised the odds of a snap election.
With surpluses set to grow, the Government appeared to have plenty of room for some kind of election year spend-up, be it tax cuts, a family support package or a combination of both, he said.
Population growth had dictated to some extent where additional spending would be required, with a big step up in capital spending planned - including contributions to the New Zealand Superannuation Fund in 2020-21.
Reconstruction following the recent earthquakes would reduce available funds.
``Nevertheless, it appears the Government's accounts are sufficiently robust to withstand some loosening of the purse strings.''
From a monetary policy perspective, signs of continued resilience in economic activity would be a welcome development, Mr Gordon said.
The Reserve Bank needed domestic activity to grow at a solid pace in order to hit its inflation target during the coming year. Since the November Monetary Policy Statement, market pricing had shifted to incorporate a more-than-50% chance of a rate hike by the end of 2017. That still appeared to be too soon, he said.
Last week, Reserve Bank governor Graeme Wheeler poured cold water on the idea the official cash rate would rise any time soon. His comments indicated the central bank expected to keep the OCR at its present level of 1.75% for some time.
ASB chief economist Nick Tuffley said the wider implications of the election of Mr English and Mrs Bennett as Prime Minister and deputy respectively were limited at most.
Business confidence could dip slightly in the near-term, given the increased uncertainty about what a Bill English government might look like.
At the same time, Mr English had had a significant input into economic and fiscal policy setting under Mr Key's leadership.
``It does create added uncertainty about the election result next year and could throw the current New Zealand Superannuation scheme settings back on to the table for debate.''
The biggest risks at the moment remained international shocks rather than a reshuffle of domestic politicians, Mr Tuffley said.
Mr English indicated in a press conference he was not ruling out a rise in the age of retirement, and he was not bound by Mr Key's pledge not to raise the age of superannuation entitlement.
