Canadian Federal Fall Economic Statement 2020

Christine MacPherson • December 3, 2020

Canada’s Federal Finance Minister provided a first multi-year peek at the impact of the pandemic on the Canadian economy and its finances in her Fall Economic Statement 2020. The deficit is set to soar to $381 bn (17.5% of GDP) in FY21—an increase of about $40 bn since July estimates. At the same time, the government acknowledges it could be as high as $400 bn under alternative scenarios of extended and/or escalating COVID-19 cases.


The blow to government revenues contributes to a quarter of the shortfall, while COVID-19 spending will add another $275 bn of deficit financing this year. The bulk of increases in pandemic spending had already been announced—but not costed—prior to the update, whereas new announcements reflect about $25 bn. This includes a $17 bn top-up to the wage subsidy program to bring its coverage back up to 75% for the remainder of the fiscal year.


Debt as a share of the economy is expected to swell to 50% this year, peaking close to 53% in 2021 and declining thereafter. But this is only a baseline that does not incorporate a new “stimulus” package of up to $100 bn promised over the next three years that would see debt soar to around 58% of GDP by 2024 under various scenarios.


The new stimulus package will be designed in the coming months with an intent to “jumpstart” the recovery. Its withdrawal would not be time-based, rather contingent on closing the output gap, loosely defined in terms of employment metrics. These so-called “guardrails” will guide fiscal policy until the economy has recovered and the government will then “return to a prudent and responsible fiscal path”.


Markets are likely to temporarily adjust to the implied bump in expected federal borrowing requirements (although an abundance of scenarios leaves this open to a wide range of interpretations), but this will be digested in an environment where global drivers are largely shaping bond market dynamics.


SHARE THIS ARTICLE

RECENT POSTS

Is Your Mortgage Pre-Approval Actually Useless? Here’s Why It Might Be

By Christine MacPherson • August 1, 2025
A Rate Hold Isn’t a Guarantee—And That Could Cost You the Home Getting pre-approved for a mortgage should feel like progress. It’s exciting, empowering, and often the first concrete step toward buying a home. But here’s the hard truth: if your mortgage pre-approval wasn’t put together properly—or if your broker or banker skipped key steps—it could be virtually worthless when you need it most. Let’s break down what a pre-approval really means, what a rate hold does (and doesn’t) do, and why experience matters more than ever in a fast-paced, competitive real estate market. What Is a Mortgage Pre-Approval Really ? A mortgage pre-approval generally includes two things: A conditional approval based on the numbers provided by your broker or banker. A rate hold that locks in an interest rate (typically for 90–120 days), giving you time to shop with peace of mind. But here’s the issue: most lenders don’t actually do a full review of your application until it becomes “live”—that is, until you’ve written an offer that’s been accepted. Before that, they’re mostly relying on the information submitted by your broker or banker , not what they’ve verified themselves.

No-Payment Mortgage Options: Are They Right for You?

By Christine MacPherson • April 11, 2025
When people hear “no-payment mortgage,” they often assume it’s too good to be true or that it comes with hidden risks. But in Canada, these options are designed to be conservative and sustainable, giving homeowners more financial flexibility without putting them in a bad financial position. There are three main types of no-payment mortgage options: Reverse Mortgages – Available to homeowners 55+ with significant home equity. Alternative Lenders – Offer similar options regardless of age but require strong equity. Private Lenders – Short-term solutions for homeowners who need temporary relief. Let’s break them down and see if one might be a good fit for you. Reverse Mortgages: Not as Risky as You Think Reverse mortgages tend to get a bad reputation, mostly because of how they were handled in the U.S. years ago. But in Canada, lenders are far more conservative. The biggest difference? Canadian reverse mortgages never allow you to owe more than your home is worth . How Do They Work? You must be 55 or older to qualify. You can borrow a portion of your home’s value , usually up to 55% . The older you are, the more you can borrow —since the lender calculates how long you’re likely to stay in the home. You don’t make monthly payments —instead, the interest gets added to your loan balance over time. When you sell or move, the loan is repaid from your home’s value. Why Can’t You Owe More Than Your Home’s Value? Most lenders offer a no-negative equity guarantee , meaning even if home prices drop, your estate will never owe more than your house is worth. But realistically, Canadian home values have remained stable or increased over time , making it unlikely you’d ever reach that point.
Show More