Trudeau exclusive to Canada to limit new spending in fiscal update – source

Canadian Prime Minister Justin Trudeau speaks during his Speech to the Throne at the House of Commons on Parliament Hill in Ottawa
FILE PHOTO: Canadian Prime Minister Justin Trudeau speaks during his Speech to the Throne at the House of Commons on Parliament Hill in Ottawa, Ontario, Canada November 30, 2021. REUTERS/Blair Gable

December 2, 2021

By Steve Scherer and Fergal Smith

OTTAWA (Reuters) – Canadian Prime Minister Justin Trudeau’s government will outline new spending restrictions in a fiscal update to be released later this month, a source said on Thursday, as inflation surges. high and some business groups and opposition politicians called for restraint.

Finance Minister Chrystia Freeland on Thursday told lawmakers that the so-called fall fiscal update will be released on December 14. The update will be “limited in scope”, a source familiar with the drafting of the document told Reuters.

This fiscal update will be similar to those released after the 2015 and 2019 elections, the source said. Other years when elections were not held, fiscal updates have been worthwhile. more telling, like a small budget.

After COVID-19 aid to businesses and individuals caused the highest deficit since World War Two last year, Trudeau during his election campaign pledged $78 billion (60 billion Canadian dollars) in spending. $0.9 billion) in new spending over five years to fuel Canada’s economic recovery.

“This will be an update on the current state of the country’s finances,” the source said of the document. “We certainly have an ambitious plan that we will continue to work on. That’s why you have a budget.”

The government is expected to announce the budget for the 2022-23 financial year in the first part of next year. Inflation is at an 18-year high and is mainly driven by supply chain problems and rising energy prices, but some worry that more government spending will make the situation worse.

This year’s budget includes investments of C$101 billion over three years.

“There is a big concern that people have about the level of government spending and whether it drives inflation and drives demand,” said Perrin Beatty, president and chief executive officer of the Canadian Chamber of Commerce. are not”.

The prospect of rising interest rates next year will increase the country’s debt repayment costs, according to a report by the Bank of Canada.


Pierre Poilievre, financial critic of the opposition Conservative Party, blames Trudeau for inflation, which he calls “Justin-flation”, with excessive government spending.

“We will be cautious,” said a second source familiar with the government’s plans.

“It is prudent to wait and see how the next few months play out and you always reserve the option in your winter budget to get a lot done,” said Rebekah Young, director of financial and provincial economics at Scotiabank. than”. “Going back is harder than launching more shows in the winter.”

In October, Freeland indicated that Canada would significantly cut spending on pandemic assistance programs because now more than 85% of the eligible population has been vaccinated against COVID-19.

“The combination of a strong revenue recovery and fiscal constraints should see federal debt and overall government debt slow to decline,” said Kelli Bisset-Tom, director of Fitch Americas Sovereignty Ratings. faster”.

Fitch Ratings is the only rating agency to strip Canada of Canada’s three-A credit rating during the pandemic.

In April, Freeland said debt as a percentage of output would gradually decrease, creating a future fiscal anchor. In the budget, debt is forecast at 51.2% of gross domestic product this financial year, falling to 50.7% next year.

Revenue grew by C$47 billion, or 36.5%, in the April-September period, according to the Treasury Department.

There was no immediate comment from the prime minister’s office. The Treasury Department declined to comment.

(1 dollar = 1.2811 Canadian dollars)

(Reporting by Steve Scherer in Ottawa and Fergal Smith in Toronto,; Editing by Chizu Nomiyama and Alistair Bell) Trudeau exclusive to Canada to limit new spending in fiscal update – source

Bobby Allyn

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