The Big Story Is the fall fiscal update a Hail Mary for the Liberal government?
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Dec 16, 2024 Tyler Meredith, a Senior Fellow at the Munk School of Global Affairs, offers insightful analysis on the unfolding fall fiscal update. The discussion reveals the government's attempts to ease financial pressures with new initiatives like a GST holiday while grappling with a hefty $40 billion deficit. Meredith highlights the challenges of budgeting in a minority parliament and the looming threat of U.S. tariffs, which could severely impact Canada’s economy. This is a crucial moment for the Liberals as they navigate economic uncertainty and potential re-election strategies.
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Conflicting Economic Trends
- Canada's economy shows conflicting trends: overall output exceeds expectations, but growth remains anemic.
- This impacts the federal budget, potentially increasing the deficit while maintaining debt-to-GDP targets.
Deficit Concerns
- Finance Minister Freeland avoids discussing the deficit, focusing on the debt-to-GDP ratio.
- This suggests a potential increase in the deficit, exceeding the government's $40 billion target.
Political Implications of Deficit
- While Canadians generally prioritize other issues over the deficit, growing concern exists.
- A larger deficit could harm the government's credibility, despite having lower debt than other G7 nations.