Latest news with #CanadianEconomy
CBC
a day ago
- Business
- CBC
Deficit to be $4.3B smaller than predicted, but spending plans remain obscure: budget report
Social Sharing The Parliamentary Budget Officer (PBO) says the deficit will be smaller than predicted but the Liberal government's lack of clarity on fiscal planning has left Yves Giroux's office unable to determine if the government's spending plans are sustainable. The Economic and Fiscal Monitor released by Giroux's office Thursday morning says that the deficit for 2024-25 will be $46 billion — $4.3 billion lower than it had predicted during the election and $2.3 billion lower than was estimated in the fall economic statement. "The revision to our estimated deficit reflects a $5.2-billion increase in our estimate for revenues in 2024-25, somewhat offset by a $1-billion increase in our estimate for expenses," the report said. The PBO said that while it predicted the Canadian economy would only grow by 1.8 per cent in the fourth quarter of 2024 and 1.6 per cent in the first three months of the year, real gross domestic product actually grew at an annualized rate of 2.1 per cent and 2.2 per cent. The report said the improved fiscal position of the federal government can be explained by stronger than expected corporate income tax revenues and the money collected from Canada's counter-tariffs on U.S. goods. Improved growth in the first three months of the year, Giroux's office said, can be partly explained by companies rushing to buy inventory before tariffs were imposed. The PBO is predicting that real GDP growth in the second quarter of 2025 will likely remain flat, with an expected decline in exports acting as a drag on the economy. "Business investment is also expected to remain subdued due to elevated uncertainty," the report said. Fiscal sustainability During the election campaign, Prime Minister Mark Carney announced his plan to separate "operational spending" — the day-to-day running of government programs and departments — from "capital spending," which is anything that builds an asset the government holds. The Liberal platform pledged that it would cut the growth of government spending from nine to two per cent by eliminating waste, duplication and deploying technology to balance operational spending by 2028. But the PBO says the Liberal government has complicated its ability to track that fiscal anchor by not fully explaining how it will define operating and capital spending. "Hence the PBO is unable to assess whether the Government's recent fiscal policy initiatives presented in Parliament … are consistent with achieving its new fiscal objective," the report said. Because of the lack of clarity, the government's spending plans could be fiscally unsustainable, Giroux's office said. "Parliamentarians may wish to seek additional clarity regarding how the government plans to measure its fiscal anchor and how it will ensure federal finances remain sustainable.
Yahoo
a day ago
- Business
- Yahoo
Federal deficit estimated to hit $46 billion in 2024-25: PBO
The Parliamentary Budget Officer estimates the federal deficit will hit $46 billion in the 2024-2025 fiscal year because of better-than-expected revenues. The PBO expects the deficit to be $4.3 billion lower than its estimate in its election-costing report and $2.3 billion lower than what was estimated in the fall economic statement, according to its updated economic and fiscal monitor report released Thursday. 'The revision to our estimated deficit reflects a $5.2-billion increase in our estimate for revenues in 2024-25, somewhat offset by a $1-billion increase in our estimate for expenses,' the PBO said. The higher revenues are mainly due to higher corporate income tax revenues and customs import duties from the retaliatory tariffs on goods from the United States. The federal government currently has tariffs on nearly $60-billion worth of U.S. goods. In April, the Liberal Party estimated the federal government could receive up to $20 billion in revenue from the retaliatory tariffs, according to its election-costed platform. But a recent report by Oxford Economics Ltd. this month said 58 per cent of the U.S. imports hit by levies are eligible for exemption. The PBO also said the average Canadian family will save $280 on their taxes next year because of the federal government's planned income tax cut to 14.5 per cent from 15 per cent on the first $57,375 of taxable income. Canadian economic growth came in higher than expected during the first quarter at 2.2 per cent, but the PBO expects it to be flat in the second quarter due to a slowdown in exports and business investment. The federal government has not committed to providing a spring federal budget. Instead, Prime Minister Mark Carney said the government will provide an update of Canada's finances in the fall. He has also said he will split operational and capital spending into two separate budgets, with a promise to balance the operational budget within three years. The PBO said the government has committed to new fiscal anchors in the operating budget by 'cutting waste, capping the public service, ending duplication and deploying technology to improve public sector productivity' and reducing the spending growth to two per cent each year from nine per cent. The Liberal Party platform has promised $130 billion in net new spending over the next four years, which will put the deficit at $62.3 billion for the 2025-2026 fiscal year. Economists estimate the deficit will be higher after taking into account the announcement last week to increase defence spending. 'Unlike the previous fiscal anchor, the government has not defined how the new operating budget targets will be measured,' the PBO's report said. 'Specifically, there is no commonly accepted definition of what is defined as 'operating' or 'non-operating/capital' spending.' GST break could cost Ottawa $2.7 billion Feds face loss if Trans Mountain pipeline sold: PBO The PBO said it will be difficult for it to assess whether the government is on track in meeting its fiscal objectives under this new budget set-up. 'PBO also notes that the government could fulfill its operating budget goals, and yet at the same time the federal debt-to-GDP ratio could grow because of additional borrowing for non-operating spending (for example, new acquisitions of weapons systems for the Canadian military),' it said. 'This means that the government could achieve its fiscal objective and yet be fiscally unsustainable.' • Email: jgowling@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
2 days ago
- Business
- Bloomberg
Macklem Warns of Firmer Inflation, Uncertainty About Impact of Tariffs
Bank of Canada Governor Tiff Macklem reiterated that he sees inflation running hotter than expected, while saying employment appears to be holding up outside of trade-intensive sectors. In a wide-ranging speech on how the trade war is impacting the Canadian economy, Macklem flagged uncertainty about how tariffs and counter-tariffs may impact price pressures moving forward, repeating that 'we can't let a tariff problem become an inflation problem.'
CTV News
3 days ago
- Business
- CTV News
Bank of Canada weighed June rate cut but trade uncertainty kept it on hold
The Bank of Canada is seen in Ottawa, on Wednesday, April 16, 2025. THE CANADIAN PRESS/Justin Tang OTTAWA — New meeting records show the Bank of Canada's top decisionmakers were weighing an interest rate cut earlier this month but didn't feel like they knew enough about how the tariff dispute with the United States would unfold to pull the trigger. The central bank on Tuesday released the summary of deliberations behind its decision to hold its policy rate steady at 2.75 per cent roughly two weeks ago. Those documents show Canada's trade war with the United States dominated conversation among the governing council. 'The primary source of uncertainty — and the biggest threat facing the Canadian economy — was the trade conflict initiated by the United States,' the deliberations read. Canada's tariff dispute with the United States kicked off in March, though the exact level of import duties has fluctuated since then. Currently, there are some exemptions from tariffs and counter-tariffs for firms in each country, but the Canadian steel, aluminum and automotive industries remain under particular pressure from U.S. President Donald Trump's trade agenda. While monetary policymakers broadly agreed that there was some 'cautious optimism' that risks of a severe global trade war had diminished, the deliberations noted U.S. trade policy 'remains unpredictable.' 'This was underscored by President Trump's announcement during deliberations that he would double tariffs to 50 per cent on steel and aluminum exports to the United States,' the meeting notes read. Trump delivered on that threat a few days later — the morning of the Bank of Canada's rate decision. While the governing council noted the economy was showing 'more resilience than expected' to date, expectations for the second quarter were 'much weaker.' The deliberations signalled some concern about softness in the labour market and noted home sales were slowing, with Toronto and Vancouver in particular seeing weakness. At the same time, monetary policymakers spent 'considerable time' discussing inflation and noted how hard it could be to track the evolution of price pressures going forward. While Ottawa's removal of the consumer price on carbon was offering some temporary reprieve in the inflation figures, the governing council noted tariff impacts on prices could be stickier. The records show trade uncertainty, combined with signs of stubbornness in underlying inflation, ultimately convinced the Bank of Canada's decisionmakers to leave the policy rate unchanged. There was a bit more debate over the path forward for monetary policy, depending on how the tariff dispute affected prices and the strength of the economy. 'The weaker the economy and the more downward pressure on inflation, the more there would be a need to lower the policy interest rate further. However, if the recent firmness in underlying inflation were to persist, it would be more difficult to cut the policy rate,' the deliberations read. The Bank of Canada's next interest rate decision is set for July 30. --- Craig Lord, The Canadian Press This report by The Canadian Press was first published June 17, 2025.
Globe and Mail
13-06-2025
- Business
- Globe and Mail
To boost productivity, more young Canadians must go into the skilled trades
Interested in more careers-related content? Check out our new weekly Work Life newsletter. Sent every Monday afternoon. The spotlight is now on skilled trades and with good reason. Looking at the trends, the demand for workers will be high and the supply will be constrained, meaning potential shortages in many occupations for years to come. And, unlike the situation in traditional white-collar positions, jobs in the trades aren't likely to be replaced by artificial intelligence. Workers can't be trained overnight to fill needs, however, so the real question might be whether we will have enough skilled workers to meet the needs of a Canadian economy facing some major economic challenges. A May report on Canada by the Organisation for Economic Cooperation and Development (OECD) outlined some of the economic issues at stake in Canada. At the top of the list is Canadian productivity, which is close to the OECD average but well below that of many advanced nations including the United States. Added to that, similar to other countries, Canada will have to deal the reality of a changing climate, which will mean a need for 'green skills'. More specific for Canada is the need to build a substantial amount of new housing. For all of these challenges, the report sees having the right workers in place as being vital and that means having enough workers in the skilled trades. At the moment, however, the skilled trades are under-represented in the Canadian workforce. According to a 2024 report from Statistics Canada, the country leads the G7 in having the most educated workforce as measured by college and university graduates, but the same cannot be said for those in the trades. In fact, the number of working age apprenticeship certificate holders is falling. In 2021 (the last year for which data is available) there were 1.62 million tradespeople employed in Canada, a drop of 5.7 per cent from 2016. Although some of this was because of pandemic closures, the pandemic also caused record declines in those registering for training in the trades, which does not bode well for supply. With baby boomers and Gen Xers rapidly exiting the workforce, the number of vacancies in the trades is rising, suggesting any current skill shortages will only be amplified over time. The OECD estimates that between retirements and new demand Canada will have about 1.2 million job openings in the trades over the next decade, which will account for about 15 per cent of all job openings. The timing is right for young workers to take a good look at the trades. The May Labour Force Survey showed that the Canadian unemployment rate for youth aged 15 to 24 was 14.1 per cent, more than twice the 6.9 per cent rate for the overall labour force. The weakness in the market suggests that many young workers should be open to the idea of acquiring training in the trades. The OECD report lists that benefits of doing so include the fact that in Canada young adults with vocational secondary or post-secondary non-tertiary education out-earn their peers with a general education by about 25 per cent. An added bonus is that apprenticeships are typically paid, which means young workers can start their careers without student debt. As for AI, for the moment, it doesn't seem likely it will have a huge immediate effect on employment in the trades. To be sure there are many applications of AI that will change the nature of trades, from using AI software to diagnose plumbing problems to utilizing it for training. Completely replacing workers with robots or any kind of technology does not seem to be practical however and any impact would likely be more muted than for many other professions. If traditional white-collar jobs appear to be the ones most at risk of being replaced, skilled trades would be at the bottom of the list. Policy is slowly shifting to deal with the need for workers in the skilled trades although it might not be shifting quickly enough. In one of his first policy acts after taking office, Prime Minster Mark Carney announced a plan to support apprenticeship training with the release accompanying the announcement to say that 'The work of bricklayers, crane operators, welders and others are essential in building the future of Canada'. The OECD report recommends that Canada go much further to increase the supply of workers, starting with eliminating the differences between provincial regulations that make it difficult for workers to move between provinces. None of the concerns around the trades are actually new and we have known for decades that the demographics would mean a wave of retirements and the need for workers. Interestingly, that was supposed to happen for a wide range of occupations but technological shifts are changing that story in many cases. With the trades bucking that trend and with the economic need for skills so high, now would be the perfect time for the public and private sectors to do what it takes and entice the labour market to shift in the right direction.
