Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive-Canada's Trudeau to limit new spending in fiscal update - source

EconomyDec 02, 2021 03:16PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Canada's Prime Minister Justin Trudeau speaks in response to the Throne Speech in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada November 30, 2021. REUTERS/Blair Gable

By Steve Scherer and Fergal Smith

OTTAWA (Reuters) - Canadian Prime Minister Justin Trudeau's government will outline limited new spending in a fiscal update to be released later this month, a source said on Thursday, as inflation soars and some business groups and opposition politicians call for restraint.

Finance Minister Chrystia Freeland on Thursday told lawmakers the so-called fall fiscal update would be released on Dec 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 following the 2015 and 2019 elections, the source said. Other years when elections were not held, the fiscal update has been more substantial, like a mini-budget.

After COVID-19 supports for businesses and individuals produced the highest deficit since World War Two last year, Trudeau during his campaign pledged C$78 billion ($60.9 billion)in new spending over five years to foster Canada's economic rebound.

"This will be an update on where the nation's finances are right now," the source said of the document. "We certainly have an ambitious plan that we will continue to move forward on. That's why you have a budget."

The government is expected to release its 2022-23 fiscal-year budget during the first part of next year. Inflation is at an 18-year high and is being driven mainly by supply chain problems and energy price gains, but some fear more government spending will make it worse.

This year's budget included C$101 billion investments over three years.

"There's a major concern that people have about the level of government spending, and whether or not it is fueling inflation and fueling demand," said Perrin Beatty, president and CEO of the Canadian Chamber of Commerce.

The prospect of rising interest rates next year, as signaled by the Bank of Canada, will increase the servicing costs on the country's debt, Beatty said.

'JUSTIN-FLATION'

Pierre Poilievre, the finance critic for the opposition Conservative Party, blames Trudeau for stoking inflation, which he calls "Justin-flation", with excessive government spending.

"We're going to be prudent," a second source familiar with the government's plans said.

"The prudent thing is to wait and just see how the next couple of months unfold and you always reserve the option in the winter budget to do more," said Rebekah Young, director, fiscal and provincial economics at Scotiabank. "It's harder to roll back than it is to roll out more programs in the winter."

Already in October, Freeland indicated Canada would significantly scale back spending on pandemic support programs now that more than 85% of the eligible population was vaccinated against COVID-19.

"A combination of strong revenue recovery and fiscal restraint would put the federal debt and broader general government debt each on a faster reduction course," Kelli Bissett-Tom, Fitch's director of Americas sovereign ratings, said on Thursday.

Fitch Ratings was the only ratings agency to strip Canada of a triple-A credit rating during the pandemic.

In April, Freeland said debt as a percentage of output would progressively decline, providing a fiscal anchor going forward. In the budget, debt was forecast to be 51.2% of gross domestic product this fiscal year, falling to 50.7% the following year.

Revenues were up C$47 billion, or 36.5%, in the April-September period, according to the Department of Finance.

There was no immediate comment from the prime minister's office. The finance ministry declined to comment.

($1 = 1.2811 Canadian dollars)

Exclusive-Canada's Trudeau to limit new spending in fiscal update - source
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Jeremy Johnson
Jeremy Johnson Dec 02, 2021 12:29PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Worth the read to gain a true understanding of Canada's political system: https://www.amazon.ca/Indian-Cabinet-Speaking-Truth-Power/dp/1443465364
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email