Looser Fiscal Policy Possible if Liberals Secure Election Victory
If the Liberals manage to secure a victory in the election and form an minority government, there could be significant changes to Canada’s fiscal policy. The article suggests that the incoming government may introduce even greater stimulus measures compared to their current platform proposal.
Key points include:
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Potential Fiscal Policy Changes: The Liberals have already outlined several spending initiatives, such as extending COVID-related support programs, increasing investments in housing affordability, and continuing pandemic relief measures. If elected, they might push for even broader or more aggressive policy actions.
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COVID-19 Supports and Employment Insurance: Businesses and small business owners are a key priority during this recovery phase. The Liberals could extend wage subsidies, rental support, and other COVID-related assistance programs to further stimulate the economy.
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Small Business Challenges: Goldy Hyder of the Business Council of Canada has emphasized the need for targeted support for small businesses affected by the pandemic, including access to proof of vaccination for staff and technology upgrades. A portion of federal funding allocated for vaccine passports could be redirected toward these needs.
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Economic Concerns: Despite the positive economic recovery so far, there are broader issues that remain pressing: an aging population, wage inequality, Indigenous reconciliation, climate change, and public debt. These challenges will require immediate attention to avoid future economic headwinds.
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Investing in a New Government: As noted by TD economists, investors have shown little reaction to the election results, with markets remaining relatively stable. This suggests that the incoming minority government may focus on delivering on its economic agenda rather than pursuing radical policy changes immediately.
In summary, while there is no guarantee of a decisive mandate, the potential for looser fiscal measures and greater stimulus support exists if the Liberals secure election victory. The focus will likely remain on restarting the economy, addressing existing challenges, and preparing for future opportunities in Canada’s complex economic landscape.
