Justin Trudeau’s cabinet’s agenda over the next three days is to take a hard look at the fiscal and economic picture facing Canada.
HAMILTON—The federal Liberal government’s budget plan to grow the economy and get the public books in order is “unlikely” to work, given its evolving ambitious political promises, higher global interest rates, and the “high likelihood of a more severe recession in 2023,” says a new report.
It says the Liberal government last year set out budget projections based on “a plausible but optimistic set of assumptions.” Dodge and Asselin foresee the need for an additional $60 billion to achieve the government’s goals. “If anything, even more spending and borrowing may be required for the government to deliver on the policy objectives,” it said.
It’s all part of a new year push to highlight what the government’s doing to secure so-called “jobs of the future.” Trudeau spent last week during stops in Saskatchewan, Quebec and Ontario pumping up Canada’s efforts to build value-added supply chains in the critical minerals and electric vehicle and battery sectors.
Dodge said $60 billion in additional spending would be needed to deliver on “what they’re trying to do, so it’s not insignificant.” “We seem in the western world, basically, to have got ourselves into a box, where the only way we can deal with things is through subsidy,” Dodge said. Inflation has meant real wage losses, household debt is “skyrocketing,” and “that’s really going to put the brakes on consumer spending,” meaning the overall picture of what “fiscal choices” to make is “complicated” for governments, he said.
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