Ottawa – Minister Flaherty’s Fall Fiscal Update clearly outlines how Canada has weathered the global recession better than most other industrialized countries and is the only Group of Seven (G-7) country to have more than recovered all of the output and all of the jobs lost during the recession.
Minister Flaherty also warned that the global economy has slowed recently, and uncertainty surrounding the short-term outlook has risen considerably. Canada is not immune to international developments. There is considerable uncertainty surrounding the economic outlook, and the key near-term risk is the sovereign debt and banking crisis in Europe.
Private sector economists have revised down their outlook for Canadian economic growth since the 2011 budget, particularly for 2011 and 2012. Real gross domestic product (GDP) is now expected to grow by 2.2 per cent in 2011 and 2.1 per cent in 2012.
The deterioration of the global economic situation has begun to be felt in Canadian employment, which remains almost unchanged since July 2011. However, almost 600,000 more Canadians are working today than when the recession ended, and the unemployment rate has declined to 7.3 per cent, down significantly from a peak of 8.7 per cent during the recession.
It is very important that the Government implement the Next Phase of Canada’s Economic Action Plan to support jobs and growth. Minister Flaherty announced in this Update that it will reduce the maximum potential increase in Employment Insurance (EI) premium rates in 2012 from 10 cents to 5 cents and temporarily extend the enhancement to the Work-Sharing Program.
At the same time, the Government is following through on its deficit reduction action plan in order to achieve at least $4 billion in ongoing annual savings by 2014–15. These savings will support the Government’s commitment to return to budgetary balance over the medium term. As well, the fiscal projections outlined in this update show that the Government remains on track to eliminate the federal deficit over the medium term.
Finally, I want to reassure everyone that the Government will continue to monitor closely the global and Canadian economic situation. If the economy weakens significantly, the Government is prepared to respond, as necessary, in a flexible and measured manner to support Canadian jobs and growth.