Future Canadian policy-makers will know how much it costs to prevent a recession from turning into a depression thanks to this week’s major economic events: It will be roughly $340 billion in 2020 dollars.
Finance Minister Bill Morneau’s spending estimate for his fight against the COVID-19 crisis, characterized by more than one pundit as “eye-popping,” caused some consternation when he released his fiscal update on July 8.
The estimated budget shortfall — in precise terms, $343.2 billion, or 16 per cent of gross domestic product, compared with about one per cent of GDP two years ago — will push the federal debt to more than $1 trillion, a figure that represents both a financial and political burden that Morneau could struggle to pay.
It’s a jarring sum for a country that likes to think of itself as prudent, and the new debt likely will weigh on policy-making for years, depending on how the government decides to confront the recovery.
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