Aug 08, 2024
Britain’s new government is replaying an old movie: discovering a big hole in the budget. Let’s not reprise that tired fiscal script here
We’ve all seen this movie before. Three weeks after the U.K. elected a new Labour government, the chancellor of the exchequer came out to say she’d had a closer look at the books. And, lo and behold, an audit showed £21.9 billion (almost $39 billion) in unbudgeted measures left behind by the departing administration. To help fill the gap, Chancellor Rachel Reeves announced £5 billion in spending cuts, hinted at tax measures to come and said more “tough decisions” were ahead.
Let’s not do that in Canada. As we get closer to the federal election that is likely in 2025, we’d have a far better understanding of the choices before us if we took a hard look at our public finances now — and then discussed realistic and sustainable paths.
April’s federal budget forecast a gradual decrease in deficits from this year’s projected $40 billion down to $20 billion, or 0.6 per cent of GDP, in 2028-29. If that happens, our debt-to-GDP-ratio at the end of the period would be 39 per cent. These numbers are manageable should everything play out as forecast. But of course it never does. Moreover, the spending track published in the budget is just for starters. Multiple uncosted pressures are looming.
Read More: https://www.timminstimes.com/opinion/canada-political-leaders-must-face-fiscal-realities-now