The federal government's fall economic update makes it clear that while the deficit is declining, the risk that Canada enters into a recession is rising.
The pared-down fiscal update presented by Deputy Prime Minister and Finance Minister Chrystia Freeland shows how the federal pocketbook has benefited from increased revenues, but as anticipated, the government is offering little in terms of new measures to help most Canadians navigate the high cost of living, as to not exacerbate inflation.
The current climate requires steadiness, said a senior government official speaking with reporters on a not-for-attribution basis inside the mini-budget lockup. The official spoke about how the federal government needs to maintain its flexibility to react to changing economic events, while also taking some steps to make it easier for workers and companies to navigate this uncertainty.
This includes funding for some pre-announced items including the Liberals' trio of affordability offerings introduced in Parliament this fall, as well as the commitment to offer rebuilding funding to Atlantic Canada and Eastern Quebec following Hurricane Fiona. Consult with credit card companies and small businesses with the intention of lowering and regulating credit card transaction fees.
On Thursday, the Liberals announced plans to launch their promised "Canada Growth Fund" by the end of 2022, and offered new details on its design, how it will operate, and what the overall strategy will be. Should Canada remain on this economic track, the deficit could be down to $3.4 billion by 2026-27, an improved outlook from the $8.4 billion projected in the federal budget. Then, by 2027-28, after the next federal election, the country could potentially see a $4.5 billion budget surplus for the first time since the Liberals came to power and quickly broke their pledge to run maximum deficits of $10 billion and balance the books by 2019.
The Conservatives were calling for no new taxes and no new spending unless it was offset by savings, while the NDP wanted to see more supports for people and more measures to target "corporate greed."
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