Highlights of the Canadian federal budget
- Sees deficit of $354B in 2020-21 and $155B in 21-22
- Debt will level off around 50.6% of GDP in 2023
- Forecasts 5.8% GDP growth in 2021, 4.0% in 2022 and 2.1% in 2023
- Sees investment of up to $30B in national childcare system over next 5 years and then at least $8.3B annually
- $595m to help companies hire back workers
- Tech giants will pay 3% of revenue in digital services starting in 2022
- Unveils 1% tax on non-resident foreign homeowners
- Covid wage and rent subsidies extended until September
The government had earlier said $80-$100B but they’re a tad above that. These numbers are enormous in a country where a $10B deficit used to be huge.
The big program here is national $10 childcare but it’s going to take awhile to make it happen because it needs to be run and negotiated through the provinces.
Everything in this so far was leaked yesterday.
Canadian 30-year yields have ticked up today, rising 5 bps to 2.039%. That compares to a 3.3 bps rise in Treasuries today. The March high in Canada was 2.17%.
There has been very little reaction in USD/CAD, which is trading at 1.2534. This new spending should keep growth strong through the summer.