Finance Minister Chrystia Freeland says federal aid programs won’t last forever, making the comments on the same day the Bank of Canada targeted 2022 for an economic recovery from Covid-19.
The road to recovery is dependent on the path of the pandemic, and the central bank warned the road will be bumpy over the next two years.
Some businesses may never reopen, while some unemployed workers won’t find a new job, leaving some parts of the economy and workforce behind as conditions, hopefully, improve.
In a speech Wednesday afternoon, Freeland defended the depth of government spending, which will send the deficit to a historic level.
But she said she isn’t among those who believe “that deficits don’t matter for a government.”
“Whether on Bay Street or Main Street, there are no blank cheques, and there are no free lunches,” the text of her speech said.
“Our fiscally expansive approach to fighting the coronavirus cannot and will not be infinite. It is limited and temporary.”
She said the federal government will impose spending limits upon itself, rather than waiting for “more brutal external restraints” from international market forces.
Freeland didn’t say what those spending guardrails will be, only that she’ll have more to say on it soon.
The central bank’s updated economic outlook released earlier Wednesday said government aid has played a key role in providing a financial lifeline to individuals and businesses.
Changes to employment insurance and new benefit programs will increase households’ disposable income, officials write, adding that the bank expects government aid to provide important support to the economy throughout the recovery.
The country has reversed about two-thirds of the economic decline seen in the first half of the year, the Bank of Canada said Wednesday, exceeding expectations.