The 2003 Federal Budget: Big Time Spending

How will the 2003 Federal Budget affect the Canadian economy? An analysis by The Conference Board of Canada indicates the Budget’s impact will be positive, but…

Document Highlights

Aggressive proposed increases in program spending of $15 billion over the next few years include roughly $6 billion of new spending financed from 2002-03 fiscal year monies.

Health care spending dominates, with roughly two-thirds of new spending related directly to health care.

• National defence, the family, and international assistance also receive important support.
• Strong stimulus is offered to the Canadian economy in 2003, increasing real gross domestic product (GDP) growth by roughly 0.5 per cent.
• The Conference Board of Canada had largely anticipated the budget measures; but as a result of the Budget, real GDP growth would increase by 0.2 percentage points from the 3.2 per cent contained in the Canadian Outlook Winter 2003 to 3.4 per cent. Growth in 2004 would remain unchanged at 3.5 per cent.
• Budget measures will provide stimulus to an economy already closing the output gap, resulting in increased inflationary pressure and possible rising interest rates.