For the month of December the deficit of CAD4.5 billion was wider than the prior year's CAD2 billion. Deficits over each of the last six months have been bigger than the previous year, at a time of stalling economic growth and rising unemployment.
Finance Minister Chrystia Freeland's fall fiscal update projected a CAD40 billion deficit for this fiscal year that's equal to about 1% of GDP, and deficits of a similar share of the economy over the next several years. The Liberal government continues to miss its own fiscal "anchors" and remains under pressure from the NDP for new spending under a deal where the NDP helps keep Justin Trudeau in power until 2025 when his regular four-year mandate ends.
Freeland has said the next full budget expected in coming weeks will again focus on the country's housing squeeze and her government faces a March 1 deadline from the NDP for a new public healthcare program. The Bank of Canada has suggested major new spending running ahead of the economy's potential growth could make it harder to tame inflation and lower interest rates.
