Economy

UK borrowing to hit peacetime high as economy faces COVID emergency: Sunak – TheChronicleHerald.ca

Published

4 years ago

November 25, 2020

By William Schomberg and David Milliken

LONDON (Reuters) – Britain will borrow almost 400 billion pounds this year to pay for the massive coronavirus hit to its economy, finance minister Rishi Sunak said on Wednesday, as the budget deficit jumps to its highest since World War Two.

The world’s sixth-biggest economy is now set to shrink by 11.3% in 2020, its biggest contraction since the early 1700s, before growing by 5.5% in 2021, Sunak said as he announced a one-year spending plan.

“Our health emergency is not yet over. And our economic emergency has only just begun,” he told parliament. “So our immediate priority is to protect people’s lives and livelihoods.”

Announcing the latest forecasts from the Office for Budget Responsibility (OBR), Sunak said public borrowing would be 394 billion pounds ($526 billion) in the 2020/21 financial year that began in April.

That was equivalent to 19% of gross domestic product, the highest ever during peacetime and almost double its level after the global financial crisis which took nearly a decade of unpopular spending cuts to work down.

In the 2019/20 year, which ended as the country began to be hit by the COVID-19 pandemic, borrowing was just over 56 billion pounds, or 2.5% of GDP.

Britain’s economy has been hit harder by the coronavirus pandemic than those of many other rich nations. Nearly 56,000 Britons have died from COVID-19, the highest death toll in Europe.

The OBR said the economy was only likely to regain its pre-crisis size at the end of 2022.

Sunak has rushed out emergency spending and tax cuts to offset the crisis, including a recent extension of the government’s centrepiece jobs protection scheme.

Sunak said the cost of the fight against coronavirus was now 280 billion pounds this year, up from a previous estimate of about 200 billion pounds.

He has previously said that now is not the time to start reining in borrowing sharply, with the economy likely to shrink again in the fourth quarter of 2020 after the latest coronavirus restrictions on businesses.

Over this year and next, day-to-day spending will rise in real terms, by 3.8%, the fastest growth rate in 15 years, Sunak said, adding that 100 billion pounds would be spent next year on longer-term investment, 27 billion pounds more than last year.

But he signalled early moves to offset at least some of his spending by announcing a freeze on pay for most public sector workers, except doctors, nurses and other health staff.

He also announced a reduction in Britain’s foreign aid budget.

“I want to reassure the House that we will continue to protect the world’s poorest, spending the equivalent of 0.5% of our national income on overseas aid in 2021,” Sunak said.

“And our intention is to return to 0.7% when the fiscal situation allows.”

Britain is also facing the risk of a trade shock in less than six weeks’ time when its post-Brexit transition deal is due to expire. No new trade agreement has yet been reached with the European Union.

($1 = 0.7490 pounds)

(Writing by William Schomberg; Editing by Catherine Evans)

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Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

3 days ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

7 days ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

1 week ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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