Budget 2010: Time to Cut or Continue Pump Priming?

February 3, 2010

Budget 2009 was the first in decades designed to stimulate the economy out of recession through heavy government spending and budget deficits. It was broadly consistent with Keyensian economics and the actions of virtually all major industrial economies.

In recent weeks, the federal government has been signaling that Budget 2010, to be delivered on March 3, will mark the beginning of a period of fiscal retrenchment, the assumption being that the economy does not need further stimulus and is starting to grow on a sustainable path.  The basic policy posture of the federal government appears to be shifting away from macro economic stimulus toward several years of cuts in spending to reduce/eliminate the deficit.

Yet there are continuing signs, particularly in the labour market, that the Canadian economy remains fragile.  This is also true in the US and other large economies which have a direct bearing on Canada’s growth performance.

On the eve of another important budget that could set the fiscal policy framework for the federal government for years, Canada 2020 will host a panel discussion of leading economic thinkers.  They will address the broad question of whether now is the right time for fiscal restraint, or whether further stimulus should be contemplated. Will cuts in government spending in 2010 potentially hinder the economic recovery?  Or is the economy growing at a sustainable rate on its own?

The panel will be moderated by award-winning journalist Don Newman.

Featured Participants

Avery Shenfeld

Chief Economist, CIBC

The Hon. John Manley

Canada 2020 Advisory Board Member

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