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A grim forecast from the PBO

Parliamentary Budget Office warns of “structural deficits”


 

The recession is over; so we’ll be back in the black soon, right? Well, not quite. A report from the Parliamentary Budget office predicts that “the downward trend in potential GDP growth observed since 2000 will continue…averaging 1.9 per cent over the 2009 to 2010 period.” The PBO also says Canada will continue to struggle with structural budget deficits, even after the economy rebounds. Structural deficits are deficits that persist even when the economy is expanding. As the name suggests, they indicate a “structural” problem: a systemic gap between income and spending. In the 2008-9 fiscal year, Ottawa went $56 billion in the red.

CBC News


 
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A grim forecast from the PBO

  1. The PBO…damn,didn't i just prorgue that guy?
    PMSH

  2. Quite damaging coming from Page, but we knew much of this months ago. Flaherty's report, once you took the shine off it and realized that some of the supporting numbers were on the (very) rosy side, basically said the exact same thing – minus the demographic effects which Page has included.

    There are some very interesting – and rather pessimistic – predictions in the report, especially on the labour market. Of particular note is the estimation that the structural deficit will increase, not diminish, even as cyclical effects approach zero. The good news is that while those long-term structural deficits are damaging and completely avoidable, they won't likely be as bad as the Mulroney or late Trudeau years, so long as we don't cut more taxes.

  3. Its all in the assumptions made in Pages model–sounds a little like the global warming alarmists models. Wasn't the same said of the deficit when Paul Martin started tackling it?–and then eliminated it! What's different is Kevin Page seems to think his assumptions are unassailable–but then he has no direct policy making role and no accountability for his predictions–

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