Canada won’t turn to “slash and burn” economics as the world braces for a looming economic downturn, Finance Minister Chrystia Freeland said.
Her comment comes after she tabled her fall economic statement on Thursday, which warned Canada is set to face “significantly weaker growth” and runs the risk of stubborn and prolonged inflation in the months ahead.
Despite a dire economic prognosis for the global economy, the fall economic statement still contained some $30 billion net in new spending measures over the next six years — and Freeland defended this approach in an interview with The West Block‘s Mercedes Stephenson, aired Sunday.
“We saw a couple of weeks ago what happens when a hard-right government decides that the solution to a challenging global economy is just to slash and burn,” Freeland said.
“That’s what we saw with (former Prime Minister) Liz Truss in the U.K. And the outcome wasn’t pretty.”
The Bank of England warned this week that the U.K. is headed for its “longest recession since records began, according to reports. Truss’s plan was widely panned as trickle-down economics, and the reaction was swift with Freeland saying the world saw the British pound “plummeting.”
“We saw British pension funds on the brink of collapsing and the Bank of England had to step in to save the British economy,” Freeland said.
“We are not going to do that in Canada.”
Times of economic uncertainty, Freeland added, are “when we need our social safety net the most, when Canadians need the security of EI and the CPP.”
“And we are going to defend that,” she added.
Conservative Leader Pierre Poilievre, meanwhile, slammed the economic statement in the House of Commons on Thursday, calling it an “inflationary scheme.”
The Opposition leader criticized the Liberals for not matching their $30.6 billion in new spending over six years outlined in the update with equal budgetary cuts, which he said will continue to drive up inflation and hurt average families.
But event before the fall economic statement was tabled, Poilievre had been critical of the current government’s plans for the economy — including its push to increase CPP and EI premiums. He has characterized the increases as “taxes” and has repeatedly called on the government to change course.
Speaking on Friday, Prime Minister Justin Trudeau pushed back. He accused Poilievre’s Conservatives of advocating for “failed” policies.
“They’re actually doubling down on the failed, old theory of trickle-down economics, which means tax breaks for the wealthy while hollowing out the middle class,” he said.
Meanwhile, the federal government did not state outright in its projections whether it believes Canada will fall into a recession, even as the chorus of voices predicting such a downturn grows louder.
The consensus of economists polled back in September projected “significantly weaker growth” than predicted in Ottawa’s budget this past spring. The new baseline forecast sees overall gross domestic product (GDP) growth of “just above zero for the next several quarters” and unemployment rising to 6.3 per cent by the end of 2023.
That projection also puts the odds of a recession in Canada at 40 per cent. But Ottawa’s update also provides a “downside scenario” outlining a worse case amid economic uncertainty.
— with files from Global News’ Craig Lord, Amanda Connolly