In its Budget 2017, the federal government introduces few new measures, and most of the funds for these measures were found within the framework outlined in previous budgets. Net spending is set to increase by a total of just $8.2 billion over the next five years. New revenue measures are expected to generate a total of $4.7 billion over the next five years, with the net result that this budget adds $3.5 billion to deficits over that period.
The deficit is expected to peak in fiscal 2017–18 at $28.5 billion (about 1.4 per cent of GDP) and then edge lower over the forecast. With no timeline for balancing its books, a deficit of $18.8 billion is still projected for 2020–21.
The Conference Board of Canada’s economic outlook is similar to the consensus forecast contained in the budget. We expect real economic growth to be slightly better than consensus this year (2.1 per cent versus 1.9 per cent), but our forecast is roughly in line with consensus over the next five years (1.9 per cent versus 1.8 per cent in the federal budget).