Trudeau urged to 'hold the line' on spending as recession looms
BNN Bloomberg
Prime Minister Justin Trudeau’s government will update its budget Thursday amid pressure to restrain spending as inflation and rising interest rates add to long-term risks.
Economists expect a commodities-driven revenue windfall will see this year’s deficit come in between $20 billion (US$14.7 billion) and $30 billion less than budgeted in April. That will leave Finance Minister Chrystia Freeland with some scope to provide more one-off measures to help Canadians cope with higher prices, should she wish.
The fiscal update is, however, also expected to show the revenue bonanza fading as the cost-of-living crisis and the Bank of Canada’s aggressive rate hikes slow economic activity to a near-halt. So Freeland is being advised to temper ambition and put revenue gains toward deficit reduction.
“The minister will be right to hold the line,” Rebekah Young, an economist at Bank of Nova Scotia, said in a report to investors this week.
