Archived - Frequently Asked Questions: Update of Economic and Fiscal Projections
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What is the key conclusion of this year’s Update of Economic and Fiscal Projections?
- The Government remains on track to balance the budget in 2015, and achieve a surplus of $3.7 billion in 2015–16.
- The federal deficit has been reduced by almost two-thirds since 2009–10 and direct program spending has fallen for three consecutive years.
Why is the return to balance so important?
- Maintaining confidence in Canada is crucial to strengthening Canada’s already sound fiscal position. It promotes job creation and opportunities for all Canadians.
- The stability of balanced budgets inspires confidence among Canadians, as well as international investors.
- Balanced budgets help keep interest rates low, attract investment, keep taxes low, and ensure sustainable social programs.
What does the document say about the state of the Canadian economy and threats to its continued growth?
- The Canadian economy has remained resilient in the face of global economic uncertainty. Over 1 million jobs have been created since the depths of the recession.
- Canada has the lowest tax burden as a percentage of gross domestic product (GDP) in over 50 years, and the average Canadian family of four has over $3,200 more after tax each year compared to 2006.
- Nevertheless, Canada is not immune to developments outside its borders. Global demand has softened, and the prices of many Canadian exports—particularly resources—are down.
- Near-term risks have eased in Europe, but important challenges remain. There is also more uncertainty about the resilience of emerging economies and how the U.S. will reduce its public debt due to divisive debates on fiscal policy.
What is the Government doing to protect the Canadian economy?
- The Government continues to act to better position Canada as a strong competitor in the global economy.
- For example, the recently concluded agreement in principle on a comprehensive trade agreement with the European Union (EU) will provide Canada with preferential market access to over 500 million consumers in the EU. As a result, Canada will be one of only a few developed economies to have preferential access to the world’s two largest markets: the EU and the U.S., which together represent more than 800 million relatively affluent consumers and almost half of global GDP.
- In the face of a fragile global economy, the Government will remain focused on supporting growth, creating jobs and returning to budgetary balance in 2015 without raising taxes or reducing important transfers that support health care and social services.
- By focusing on the long view, and taking strong, decisive action whenever necessary along the way, Canada has grown stronger and will continue to do so.