Parliament’s spending watchdog says the estimated deficit for the year has likely risen to about $260 billion, leaving the government with little fiscal firepower to stimulate an economic rebound.
Parliament’s spending watchdog says the estimated deficit for the year has likely risen to about $260 billion, leaving the government with little fiscal firepower to stimulate an economic rebound.
Budget officer Yves Giroux previously estimated the federal deficit at $252.1 billion this fiscal year on account of a sharp increase in spending on emergency aid and a subsequent drop in economic activity related to the COVID-19 pandemic.
Speaking to the Senate finance committee Tuesday, Giroux said the government has added about $7.6 billion in spending since his last report, pushing the potential deficit ever deeper.
Giroux said that level of spending isn’t sustainable for more than a few years. He said emergency aid would have to eventually sunset “otherwise we’ll be looking at a level of taxation that’s not been seen for generations in this country.”
Federal finances could be helped by an economic recovery that would lower the deficit, which Giroux said is feasible alongside balanced, or close to balanced, budgets.
But to