A Long Way from Plan B
The best one can say about today’s Economic and Fiscal Update is that it signals some very slight flexibility amid changing circumstances.
The Minister said “We will not be bound by ideology when it comes to making decisions to keep our economy strong and protect Canadians, their financial security and their jobs. We have responded to critical situations with flexibility and pragmatism, and we will continue to do so as situations dictate”.
Plan A – balancing the books by 2014-15 through deep spending cuts – has to be rethought now that growth forecasts for 2011 and 2012 in the last BudgetÂ have been cut by 0.7% of GDP each year
Faced with lower than forecast revenues due to a slowing economy, Flaherty has pushed off by one year his target year for eliminating the deficit. But he still remains committed to the $4 Billion in annual spending cuts to reach that target by 2015-16.
Plan A (slightly revised) carries with it the implication of virtually no new government initiatives in the next Budget to support employment, despite a forecast that the national unemployment rate will average 7.2% in 2012 (and that seems very much on the optimistic side.)
In short,Â we are a long, long way from the Plan B we need to deal with the new phase of the crisis.