Briefing

Deficits exceed projections, but Bill Morneau says economy is ‘sound and growing’

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The finance minister’s fall fiscal update projected a $26.6-billion deficit for 2019–20, an increase from the $19.8-billion estimate in the March federal budget. That will rise to $28.1 billion in 2020–21. The finance department predicts the economy will grow 1.7 per cent in 2019 and 1.6 per cent next year, unchanged from its budget projections. (The Logic)

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Talking point: Monday’s fiscal update differed from a typical fall economic statement, which includes new programs and policies. But the lack of new spending means the deficit projections could grow further after the 2020 federal budget, when the Liberals start to implement their election platform. And while Canada’s national debt remains low compared to the size of the economy, Morneau’s update acknowledges “fundamental structural shifts” across the world that could hurt global growth. If the result is a recession, a large deficit could leave less money for economic stimulus programs.