Erin O'Toole's Conservatives prepare to return Canada to fiscal and monetary austerity - 2021-08-24
During the COVID-19 pandemic, most of the sacred and long-standing precepts of neoliberal macroeconomics were thrown out the window, and for good reason. Dramatic interventions in both fiscal and monetary policy in Canada and other countries helped economies get through the pandemic and resulting recession. Erin O'Toole's Conservatives, however, are now signaling they will quickly reverse course and resuscitate those neoliberal principles if they form the next government.
Governments around the world racked up eye-watering deficits as they opened the fiscal taps to support personal incomes, subsidize businesses, and finance public health responses. Canada was no exception. The federal deficit exceeded $350 billion for 2020-21, or around 15 per cent of national GDP -- the biggest (in relative terms) since World War II, and unimaginable in conventional economic discourse.
Canada's deficit was among the largest of OECD countries, indicating a relatively ambitious response to the pandemic. But most industrial countries also incurred very large deficits: across the whole OECD, they averaged around 12 per cent of GDP.