Federal budget 2022: Liberals banking on subsidies to reduce impact of inflation on people’s lives. But, most of the measures are marginal
Why is that the case? In part it is due to more federal spending pushing up the economy’s demand for goods and services. It is also due to new tax and regulatory measures that will further add to supply shortages. It does not take an economics degree to figure out that more demand and less supply means higher prices, which we can expect during these turbulent times.
Federal spending has ballooned compared with pre-COVID times. In this fiscal year, it topped out at $488 billion, almost a third higher than federal spending before the pandemic hit. By next year, the budget predicts spending will drop to $452 billion as most COVID relief spending is no longer with us. However, even next year, this level of federal spending remains $90 billion or 25 per cent more than pre-COVID days.
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