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The 2021 federal budget pledged federal spending growth on investment and goods and services far greater than what was observed after the 2008-09 financial crisis.
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The budget revealed increased spending on a wide range of initiatives, including support for a system of affordable early childhood education, increased funding for post-secondary students, enhancements to Old Age Security and the Canada Workers Benefit, and investments in digital infrastructure and transit, just to name a few.
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Overall, these measures will help boost real federal investment spending by 14.7% this year and its spending on goods and services by 12.5%.
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While spending levels will remain elevated throughout the near term, they are expected to recede from the 2021 high in the near term; the most significant drop will be in 2023.
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This decline in spending in 2023 will soften overall economic gains that year, although other sectors of the economy will be strong enough by that point that the economy will only experience a modest slowdown as the federal stimulus is slowly withdrawn.