Liberals to Push Forward with Massive Debt Increase Despite Financial Sectors Warnings

There is a tension between the health and safety, and business sides of Canada as Prime Minister Justin Trudeau and the Chiefs of major Canadian banks are stressing different issues arising from the COVID-19 pandemic.

Trudeau is urging Canadians to more strictly follow the COVID-19 public health guidelines as cases have slowly ticked upward over the past month.  

When speaking to reporters Trudeau warned, “we are not out of the woods yet,” going on to say, “The last thing anyone wants is to go into this fall in a lockdown similar to this spring, and the way we do that is by remaining vigilant,” very much emphasizing health as the government’s top priority still. 

Outside of the government executives from some of the largest banking institutions in Canada met with Deputy Prime Minister and Minister of Finance Chrystia Freeland and urged the government to get its debt under control and to commit to new debt limits. Right now Canada’s debt is pushing over $874 billion, $343 billion of which is due to COVID-19 related spending alone.

Royce Mendes from the Canadian Imperial Bank of Commerce said about the situation that, “There’s no specific line in the sand for how high the government’s debt-to-GDP ratio can go, but the sky is not the limit,” and that, “Governments shouldn’t unnecessarily test the limits.”

The executives and Freeland did agree that productivity needs to be increased and simply not just consumer demand (through programs like CERB), but there was no indication there was agreement on the deficit. 

Rather than cutting government expenses and easing COVID-19 restrictions hurting the economy Trudeau’s Liberal government seems poised to try and grow the Canadian economy out of the debt by maintaining deep deficit spending for years to come.

Canadians may be evenly split on whether or not the government should focus on reducing the deficit or not, but at the very least those in executive positions in Canadian banks believe it needs to be a top priority.

One statement made by the Minister of Environment Jonathan Wilkinson gave a glimpse into the Liberals recovery plan which seems unlikely to take any emphasis off of their environmental plan. 

But of course, as we look forward, we have to think about the priorities and those priorities have to be around job creation, economic recovery, but they also have to be about the crises that we know are looming on the horizon, and that is the crisis of climate change and the global decline of biodiversity.

Details are light at the moment but it seems like whatever comes next in dealing with COVID-19 and the economy won’t be satisfying bank executives.