MENU
01
Home
02
Services
03
Sectors
04
Team
05
Our Work
06
Updates
07
Careers
08
Contact
Services
01
Government Relations
02
Communications & Digital
03
Advisory Services
Sectors
01
Energy
02
Environment
03
Health Care
Updates
01
Insights
02
News
EN
FR
HomeServicesSectorsTeamOur WorkUpdates
EN
FR
insights
updates
July 8, 2020

Federal Economic Snapshot

written by
Federal Team
Federal Economic Snapshot

Today, Finance Minister Bill Morneau tabled a federal economic snapshot of the Canadian fiscal situation four months into the COVID-19 pandemic. The federal government originally planned to release the 2020 Budget on March 30, but it was postponed indefinitely. This is the first comprehensive look into the cost of the government’s response to COVID-19 and the resiliency of the Canadian economy.

The update focused on the cost of measures taken to combat COVID-19, its impact on the Canadian economy, and how Canada’s recovery compares to other countries. It does not contain any new program spending and does not project Canada’s fiscal situation beyond the end of this fiscal year. As noted by Minister Morneau in his speech to the House of Commons, “the possibility of further outbreaks looms on the horizon, and accurate long-term forecasting is impossible in such a volatile environment.”

Topline Numbers

  • Canada’s projected deficit for 2020-2021 is $343.2 billion, more than 10 times the pre-COVID projected deficit of $28 billion.
  • 5.5 million Canadians – 30% of the workforce – either lost their jobs or saw their hours significantly cut in March and April.
  • Private sector economists expect the economy to contract by 6.8% in 2020, its sharpest drop since the Great Depression, before rebounding by 5.5% in 2021. This forecast leaves GDP below 2019 levels at least into 2022.
  • Over 8 million Canadians accessed the Canada Emergency Response Benefit (CERB).
  • To date, about 3 million Canadian workers have had their jobs supported through the Canada Emergency Wage Subsidy (CEWS).
  • Over 680,000 small businesses received interest-free loans through the Canada Emergency Business Account (CEBA).
  • 15 million low and modest-income Canadians received a special GST credit top-up.

Analysis and Reaction

The numbers paint a picture of a government response that was effective in some areas and less so in others.

The CERB was an incredibly popular program, expected to cost the government $80.5 billion but the wage subsidy remains stubbornly underused. Similarly, the Canada Emergency Commercial Rent Assistance (CECRA) has been ignored by many landlords–to the consternation of many tenants – and not one large company has made use of the Large Employer Emergency Financing Facility (LEEFF).

Overall, however, it must be recognized that the government rolled out the most substantial peace-time assistance package in history in only a few months and remained open to tweaks and improvements throughout the process.

The go-forward challenge for the government is to recognize that many individuals, families and businesses have fallen through the cracks because they did not line up with hastily designed program criteria. The government cannot rest on its laurels; instead, it must continue the time-intensive and difficult work of identifying segments of Canada that remain at real risk and developing strategies to continue to provide tailored assistance.

Looking Ahead

Many observers were hoping that Minister Morneau would use the occasion to outline Canada’s post-COVID recovery strategy, both in terms of winding down emergency programs and developing new investment initiatives to kick-start the Canadian economy.

However, details of the government’s plans to rebuild the Canadian economy were thin. Minister Morneau did stress that the government will invest in an economy that is greener and more diverse, and the document itself references the term “build back better” which is a popular phrase amongst green infrastructure groups. These commitments signal that the Trudeau Government is still committed to its overall environmental goals despite the economic impact of the pandemic. Both the Minister and the document, though, stopped short of giving any detail on how and when a green stimulus program might roll out.

Instead, Minister Morneau stressed that the investments made in COVID-19 programs mean that the Canadian economy will recover quicker than it would have if the investments had not been made.

Not willing to give the government a pass, the Opposition parties continue to press for a clearer path forward. The Conservatives have called for a plan to wind down COVID-19 measures, especially the CERB, as well as more funding for the Auditor General’s office to enable greater scrutiny and spending transparency. The NDP, on the other hand, has warned against premature cuts to COVID-19 programs and have instead pushed for more effective crackdowns on income and corporate tax avoidance as well as a wealth tax to help pay for program extensions.

The bottom line is that the economic snapshot is sobering. In the span of a few months Canada has run the largest deficit in its history. This raises three major policy questions that will be debated in every corner of government in the weeks and months ahead:

  1. What is the government’s capacity to respond to future waves of COVID-19 cases?
  2. What pre-COVID priorities will get squeezed off the agenda due to limited fiscal capacity?
  3. How are Canadians going to pay for this over time?

These questions will almost certainly shape the next federal election, which, under a minority parliament can be triggered at any time. They will also shape the business environment, the relations between the three levels of government and Canada’s place in the world in profound ways that are only beginning to be understood.

Conclusion

Seeing the numbers today remind us that we are in uncharted territory. As the new political, economic and social landscape emerges, the team at Sussex wishes all of our valued clients continued success and remain on hand to assist with whatever needs arise.

No items found.
share article
Link copied
‍

RECENT POSTS

Ontario’s Integrated Energy Plan
June 12, 2025

Ontario’s Integrated Energy Plan

June 12, 2025: The Government of Ontario released Energy for Generations | Ontario’s Integrated Plan (IEP) to Power the Strongest Economy in the G7, formally signaling the need for immediate action and long-term planning. The plan aims to present a holistic policy strategy that will guide Ontario’s energy planners and regulators based on four core principles: affordability, security, reliability, and clean energy.

Bill 40: Protect Ontario by Securing Affordable Energy for Generations Act, 2025 Introduced in Legislature
June 4, 2025

Bill 40: Protect Ontario by Securing Affordable Energy for Generations Act, 2025 Introduced in Legislature

Yesterday, the Government of Ontario introduced the Protect Ontario by Securing Affordable Energy for Generations Act, 2025. This legislation is reflective of several themes and priorities raised during the recent Ontario Election for the province’s energy sector, including affordability, energy security, economic growth, and domestic control.

Bringing Strategic Leadership and Energy Expertise to Atlantic Canada
May 29, 2025

Bringing Strategic Leadership and Energy Expertise to Atlantic Canada

Sussex Strategy Group, one of Canada's leading government affairs firms, is excited to announce the appointment of Andrew Parsons as Senior Counsel. A former senior cabinet minister in the Government of Newfoundland and Labrador, Andrew brings deep expertise in energy, public policy, and legislative strategy to Sussex, further advancing the firm's growing presence and capabilities across Canada.

view all
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
company
HomeTeamCareersContactTerms & PoliciesAccessibility
explore
ServicesSectorsOur WorkUpdates
follow us
ALL RIGHTS RESERVED © 2020
Land Acknowledgement