OTTAWA: Ontario Premier Doug Ford’s government, opening a new provincial parliamentary session on Tuesday (Aug 9), warned an economic slowdown could be coming to the province as Canada’s central bank rapidly hikes interest rates to curb inflation.
Ford’s Progressive Conservatives returned to power in Canada’s most populous province in June on the back of promises to increase spending, raise the minimum wage and provide tax relief at the gas pump.
In a speech delivered by Ontario Lieutenant Governor Elizabeth Dowdeswell, the Ford government noted a growing sense of uncertainty as the province grapples with fast-rising inflation, a generational labor shortage and high debt loads due to “unprecedented spending” on the pandemic.
“These looming fiscal and economic challenges cannot be understated or ignored. They must be confronted head on,” Dowdeswell said in the speech, delivered on Ford’s behalf.
“Ontario, like the rest of Canada and North America, must be prepared for the possibility of a near-term economic slowdown,” she added.
Inflation hit a near 40-year high of 8.1 per cent in June. This prompted the Bank of Canada to raise its policy rate by 100 basis points last month, its fourth increase this year, as it pledged more to come.
The throne speech reiterated promises to build more homes and highways, and again called on the federal government to allow for increased immigration to address labor demand.
Ontario is Canada’s manufacturing heartland and home to roughly 40 per cent of Canada’s 38.2 million people. It is one of the world’s largest sub-sovereign borrowers, with publicly held debt standing at C$418.7 billion (US$324.85 billion) at the end of the last fiscal year.