Thursday’s budget starts from a better place than expected, with the 2021-22 fiscal year deficit coming in at $113.8-billion, around $30-billion better than expected in the government’s December update
. This is the result of rapid economic growth coming out of pandemic lockdowns alongside blistering inflation, which has pushed up prices for consumers but also put more tax money in the government’s coffers.
“Given the level of federal debt right now, we’re unlikely to see rapid consolidation. But certainly this [budget], in conjunction with more positive than previously budgeted results from the provinces, … is supporting a gradual, but better than previously expected, downward trajectory,” she said. The government’s central economic scenario is based on a survey of private-sector economists conducted in February. These numbers look increasingly out of date given Russia’s invasion of Ukraine, and the hawkish shift from central banks over the past month.
“It speaks to the challenge of creating a budget at this time, because you can think of many possible events that could happen. We now have global conflict, we still have a pandemic. We have runaway inflation and this policy risk, so there are easily five different scenarios that are less desirable,” Ms. Young said.
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