Canada's economic update reveals record high debt of $1.2 trillion
Canadians have long been awaiting an official fiscal update from the federal government to better understand how badly our national economy has been impacted by the pandemic.
Finance Minister Bill Morneau shared the numbers in Parliament on Wednesday and unfortunately, as was expected, things are looking pretty bleak. But, he assures residents that Canada is well poised to deal with the fallout.
Some of the main takeaways of Ottawa's economic update include a projected deficit of $343.2 billion for 2020-21 — mostly due to one-time emergency spending through public benefits — which is a 1,000 per cent increase from what the government had at one point expected and the biggest since the Second World War.
Canada also now holds a record high debt of $1.2 trillion, hitting us twice as hard as the last recession and putting us what Morneau called "the most profound downturn since the Great Depression."
Other stats from today's snapshot include:
Looking through the Finance documents, it appears $343.2B deficit and a 49% debt/GDP ratio is the *best* base scenario.— James Moore (@JamesMoore_org) July 8, 2020
Some slightly less awful news, for comparison:
In 1930, the economy shrank by 15%. This year, Canada's economy forecast to shrink by 6.8%. #FES20— David Akin 🇨🇦 (@davidakin) July 8, 2020
Morneau notes that these numbers will surely draw criticism but "our government knew that the cost of inaction would have been far greater."
"Those who would have us do less ignore that without government action, millions of jobs would have been lost, putting the burden of debt onto families and jeopardizing Canada's resilience," he said.
He also noted that $9 out of every $10 of direct financial support provided to citizens during COVID-19 has been financed by the feds, and will lead to lower unemployment and higher consumer spending to help us recover quicker.
"At a time when Canadian workers and families are facing significant hardship, austerity and tightening the belt was not the answer," Morneau said to his fellow MPs today. "Someone was going to have to shoulder the costs, and the federal government was uniquely placed to take this on."
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