Federal Budget 2019 Economic Analysis
Budget 2019 offers a little to many, with new spending available for middle-class workers, students, and seniors. The budget does not offer incentives for business investment to address Canada’s lagging productivity.
In its 2018 Fall Economic Statement, the government committed billions in funding to offer corporate Canada incentives to increase their investment spending. In Budget 2019, the government went back to the platform that got it elected four years ago—investing in the middle class. But with limited ability to increase spending without increasing deficits, the additional spending announced in this budget was small at just $3.8 billion a year. Further, the new spending was scattered across a host of new measures designed to appeal to seniors and millennials ahead of an upcoming federal election.
The budget was delivered against a backdrop of economic uncertainty. Canada’s economic growth has slowed sharply, and while our own forecast calls for the slump to be short-lived, there are numerous risks to the outlook. A prolonged economic slowdown would certainly have negative implications for the government’s deficit projections. While there was little that the government could have done to prevent the current slowdown in economic growth, it could have done more to address Canada’s poor level of business investment and lagging productivity.