Canada's Liberal party says budget of sacrifice' needed to avoid recession

"Canada's ruling Liberal party has said a budget of sacrifice is required to confront both a trade war with the US and a protracted cost of living crisis that threatens to push the country into a recession. But with opposition parties signalling they won't support the fiscal plans of the prime minister, Mark Carney, a failed parliamentary vote on the budget could plunge the country into another federal election in the coming weeks."

"The country's finance minister, Francois-Philippe Champagne, will on Tuesday unveil a spending plan his government has signalled will include both steep deficits and spending cuts. Few details have leaked ahead of the announcement, which will mark the first substantive look at how Carney plans to avoid a recession while locked in a trade war with the US, Canada's biggest economic partner."

"In Canada, a federal budget is a confidence vote, meaning once it is tabled as legislation, a lost vote would probably trigger the collapse of the minority Liberal government and plunge the country into its second federal election in less than 12 months. The Liberals hold 169 seats and need to find another party, or at least three other lawmakers, to vote with them to pass the budget."

Canada's Liberal government plans a budget framed as a budget of sacrifice to address a US trade war and a prolonged cost-of-living crisis that threatens recession. Finance minister Francois-Philippe Champagne will unveil a spending plan including both steep deficits and spending cuts. Ottawa has used tax cuts and increased defence and infrastructure spending to support industries hit by US protectionism, straining fiscal positions. A federal budget is a confidence vote; a failed vote would likely collapse the minority government and trigger a second federal election within 12 months. The Liberals hold 169 seats and must secure added support or abstentions amid opposition skepticism.

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