OTTAWA—Canada’s budget watchdog says the economy is paying a heavy price for government spending restraint aimed at eliminating deficits.
Parliamentary Budget Officer Kevin Page says federal and provincial government restraint will slice 0.7 percentage points from economic growth in 2013 and slightly more in 2014.
And Page says that will result in fewer jobs, with the unemployment rate rising to 7.9 per cent next year from the current 7.2 per cent.
The spending restraint and public service cutbacks in Ottawa will have the desired effect on the government’s books, however.
Page predicts the Harper government will indeed be able to balance the budget when it says it will, in 2015-16, and may even achieve the feat a year earlier.