With inflation pressures rising, Liberals to give budget update on Dec. 14

By Jordan Press, The Canadian Press | December 2, 2021 | Last updated on December 2, 2021
2 min read
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The Trudeau Liberals will provide an update on the health of federal finances on Dec. 14.

The document will also provide the government’s outlook for an economy facing high inflation rates, flooding in British Columbia and the emergence of a new variant of Covid-19.

Finance Minister Chrystia Freeland says the government knows it is important to be transparent about the country’s finances.

The update will be delivered just three days before Parliament is set to rise for a winter break.

Higher oil prices among other economic factors are expected to pad the government’s bottom line — UBC economist Kevin Milligan estimated the extra wiggle room could be as much as $10 billion — giving the Liberals extra budgetary breathing room.

The Liberals have promised to spend $100 billion in stimulus, and pledged billions more in the election campaign, which has stoked warnings from experts that too much spending could fan inflation by increasing consumer demand at a time when the supply of goods just can’t keep up.

“It seems to me that you combine this with all the savings Canadians have right now and that’s a lot of money in the economy in the short term,” said Robert Asselin, senior vice-president of policy at the Business Council of Canada and a former Liberal budget chief.

“You just want to be careful not to fuel more consumption, more demand, and make inflation worse.”

Rebekah Young, Scotiabank’s director of fiscal and provincial economics, says messages coming out of the Finance Department point to plans to release a minimalist update instead of one with many new spending measures.

She said it would make sense to hold back on unleashing major parts of the extra $53 billion in net new spending pledged on the campaign trail, at least for now until inflation rates start coming down.

“I expect this spending still has a good chance of seeing the light of day, just not before the holidays,” Young said.

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Jordan Press, The Canadian Press

Jordan Press is a reporter with The Canadian Press, a national news agency headquartered in Toronto and founded in 1917.