Attack ads follow bank rate cut
The Conservative government tried to turn bad economic news to its political advantage as the Bank of Canada outlined a less-than rosy financial forecast for the rest of the year that could threaten the government’s pledge to balance the budget.
The central bank projected the economy would grow by just 1.1 per cent this year _ much lower than the 2.0 per cent that was expected when the Conservatives put together their last budget.
If the bank’s dismal forecast comes to pass, the $1.4 billion surplus projected in the 2015 budget could well become a deficit, since federal coffers would be $4.1 billion slimmer, according to a sensitivity analysis in the April budget.
The optics of running a deficit could be tricky for the Conservatives as they head into an election touting themselves as the only party that could manage federal finances in rough economic times. The government could well be forced to find about $2 billion in savings to balance the books.