The federal government in Ottawa will delver a budget update on December 14 that is expected to show an improving fiscal situation after months of accumulating debt during the pandemic.
High inflation, while bad for consumers, is having some benefits for government finances, with rising prices for things such as oil providing additional tax revenue.
As a result, national income is on track to be about $80 billion more annually over the next three years than projected in the government’s last full budget delivered in April of this year.
More broadly, Canada’s economic picture is looking less favourable with real production growing more slowly than the government predicted in April.
There is growing pressure on Ottawa to take some steps to help people deal with higher inflation. Quebec’s provincial government, as part of its fiscal update in November, announced a one-time payment of $275 for individual low-income earners, or $400 for couples, to help them manage the rising cost of living.
In its April budget, Ottawa had projected a deficit of $155 billion in the fiscal year that began April 1, or 6.4% of GDP before lowering that forecast to $60 billion.
