Source: Budget 2012
Source Budget 2012
The above charts on unemployment and economic growth are taken from the Government’s budget documents and they are used to justify the policy thrust in the budget that although there are some weaknesses in the economic recovery, the recovery is proceeding and it is safe to introduce modest cuts in expenditure and eliminate civil service positions as part of an austerity exercise. But is this really the case or this a risky decision that might well turn out to be an error? The European economy is re-entering a recession because of the excessive austerity that has been imposed by conservative governments throughout the region and the hidebound monetarism of the European Central bank. China appears to be slowing down somewhat and although things have been improving in the U.S., their unemployment rate remains elevated. Growth in Canada has been positive but it is now slowing. This budget cannot help but slow progress somewhat. Federal cuts and job losses will be reinforced by cuts in Provincial and local government budgets. Fortunately the immediate cuts are not massive but the climate of austerity that will grip the capital will not be helpful in promoting growth. The consensus forecasts of private sector economists projects modest growth at best.