Trudeau government’s fiscal update shows billions more in deficit

According to the Finance Department, Canada’s federal budget deficit will continue to increase by billions more this year and the next.

The data released today shows that the Liberals have projected a deficit of 19.8 billion over the last twelve-month period ending in March is now set to hit $26.6 billion. This before it hits 28.1 billion in the following year.

None of the above includes costs for promises made that will be perused in the 2020 budget.

With the debt to GDP ratio rising to 31%, some economists may worry about the long-term stability of the Canadian economy as the Liberal government has been unable to reduce deficit size over the last five years, even though the economy has been growing.

The Liberals notably came into government in their first term by promising only two deficits, each less than $10 billion.

Since then the deficit has only increased, with the second term Liberals projecting an addition of at least $80 billion in new debt over the next four years.

This can be a problem if the nation falls into a recession, as Canada is already spending large sums through deficits to keep the economy growing at a rapid and perhaps unequal pace, with oil-producing provinces still feeling left out.

If a recession hits, some wonder how much more the already deficit extended government would have to spend in order to counteract the drop in consumer and global spending which would follow any larger drop in global economic activity.