With the government having announced a significant fiscal stimulus to combat the spread of COVID-19, but will it be enough to help businesses and workers?
Speaking on Global News’ The West Block, MLI Senior Fellow Philip Cross joined Goldy Hyder, President of the Canadian Business Council, and Mike Le Couteur to discuss the economic impacts of COVID-19 and if the government fiscal stimulus will be enough to mitigate the negative impacts on businesses and workers.
“I don’t think we should be concerned with debt to GDP ratios at all. This is a healthcare crisis. It has economic implications and we should be aware of that. But fundamentally, we’re not going to solve this with monetary and fiscal stimulus or economic policy, we have to get this virus under control,” says Cross.
If Canada fails to contain the virus, no economic interventions will prevent Canada’s economy from tumbling according to Cross. Healthcare and health outcomes should be the priority during this time.
Cross goes on to explain that we will not be spending our way out of this crisis. Interventions such as social distancing and ensuring proper washing of hands at little cost to the government, but will have the biggest impact on Canadian health outcomes.
Government spending should be focused on mitigating the negative economic impacts on Canadian workers and businesses. The upcoming federal budget will have to pivot as Canada’s economy will suffer deep losses during this crisis. Pivoting the budget in a short amount of time will be a monumental task, however it is a necessary one according to Cross.
“This is a classic black swan. This came out of nowhere. Nobody was expecting this. The whole budget planning cycle was going into other priorities. But I think they’re going to have to pivot. This is the first, second, and third economic problem this government has to deal with now. So they have to focus on that and that exclusively,” says Cross.
