Housing spending is expected to rise in Canada amid poor growth and heavy debt. In her midyear budget statement on Tuesday, Canada Finance Minister Chrystia Freeland will report rising deficits, poor economic growth, and targeted housing supply spending. Prime Minister Justin Trudeau’s Liberal administration is under pressure to cut expenditures, which the central bank warned was fueling inflation. Interest rates are at a two-decade high.
Freeland will deliver the Fall Economic Statement (FES) to the Commons after 4 p.m. EST (2100 GMT). “More spending is likely, along with bigger deficits,” warned Scotiabank capital markets vice president Derek Holt.
Holt said electric-vehicle maker incentives, new federal civil-servant contracts, and increased interest rates will increase this year’s deficit beyond the March budget plan.
Monday’s Canadian Broadcasting Corp. report said the FES would contain C$15 billion ($10.9 billion) in 10-year loans for new rental housing construction, a C$1 billion fund for affordable housing, and new mortgage guidelines for lenders dealing with risky homeowners.
The Sunday Toronto Star stated that the FES may tax short-term rental firms like Airbnb (ABNB.O.) to reduce profits. Housing Minister Sean Fraser acknowledged the government’s consideration on Monday. The government is criticized for housing affordability, which many Canadians face. Although an election is not due until 2025, surveys show Trudeau trailing his Conservative opponent, Pierre Poilievre.
Freeland has pledged to use the FES to increase home availability and aid Canadians facing inflation. From March to July, the Bank of Canada raised rates to 5.00%, a 22-year high. It has now held them stable but cautioned that inflation, which was 3.8% in September, could rise above its 2% target.
The FES and Canada’s government will introduce legislation this month to start subsidizing carbon capture and net-zero energy projects, a source told Reuters, to help the country compete with the US for green investment.
Comment Template