Today's news: Trending business stories for January 22, 2024

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Canada unlikely to meet fiscal goals, business group warns

One of Canada's largest business groups says Prime Minister Justin Trudeau's government is unlikely to follow through on its latest pledge to rein in the budget shortfall.

In November, Finance Minister Chrystia Freeland added new fiscal targets in the government's fiscal report, including a goal to keep the deficit below 1% of gross domestic product from the 2026-27 fiscal year.

Canada's government debt burden is lower than many other developed countries, and the government argues the new target will play an important role in demonstrating fiscal restraint. Bank of Canada Governor Tiff Macklem said the new guardrails will “help” monetary policy.

But a new report from the Business Council of Canada says the government has systematically ignored past fiscal targets, casting doubt on its latest promises.

“Achieving the proposed deficit target will either require much stronger-than-expected economic growth or require significant program cuts ahead of the election,” the report said. said Robert Asselin, the council's senior vice president for policy and former advisor. to Freeland's predecessor, Bill Morneau.

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Asselin's analysis finds that Canada's federal deficit averaged 1.4 per cent of the country's gross product from 2017 to 2022, after adjusting for changes in economic activity such as shutdowns due to the COVID-19 pandemic. .

Only twice since World War II has the budget shortfall been less than 1% of GDP when the country's spending was above 17%. Federal spending this year represents 17.3% of GDP, and the forecast is “very unreliable” compared to the five-year forecast, Asselin said in the report.

With elections due by fall 2025, spending pressures will increase. The uncertainty about the impact of increased debt repayments is also a cause for concern.

Eric Hertzberg, Bloomberg

Read the full text here.

7:30am

Stock market before the opening bell

Global stocks rose on Monday as futures hit a new record high on Wall Street.

Europe's Stoxx 600 index rose 0.5%, led by banks, real estate and tech stocks. Futures contracts for the Nasdaq 100 index rose 0.6% and the S&P 500 index rose 0.3%. It was the last of the three major U.S. stock benchmarks to hit an all-time closing high.

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Stock markets ignore a rise in bond yields in January on optimism about the resilience of the US economy, confidence that central banks will start cutting interest rates later this year, and signs that the artificial intelligence boom is here to stay. are doing. Meanwhile, the performance of the majority of S&P 500 companies provided a positive surprise in recent earnings season.

“At the same time that we're talking about rate cuts, we're moving into an environment where we think the economic slowdown is coming to a soft landing,” said Jun Bei Liu, a fund manager at Tribeca Investment Partners in Sydney. “When you put all this together, it looks pretty positive for the stock market.”

The S&P/TSX Composite Index ended Friday up 0.72%.

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what will you see today

Prime Minister Justin Trudeau held a cabinet dinner in Montreal to focus on prioritizing “work to support the middle class and build an economy that works for everyone.”

United Airlines Holdings will report its financial results today.

Need a refresher on Friday's top headlines? Get caught up here.

Additional reporting from The Canadian Press, Associated Press and Bloomberg

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