Morneau could lose job over virus response

Canadian Finance Minister Bill Morneau’s job appeared uncertain on Tuesday after reports he had clashed with Prime Minister Justin Trudeau, prompting analysts to fret about Ottawa becoming distracted as it tackles the coronavirus crisis.

The Globe and Mail cited unnamed sources as saying Trudeau was uncertain whether Morneau was the right person to handle the recovery. Morneau was unhappy at how much money Trudeau wanted to spend to deal with the outbreak, it added.

Morneau, 57, has been finance minister since the ruling Liberals took power in late 2015.

“To have turnover in such a key role in the middle of an economic crisis ... could rattle investor confidence in Canada and in turn weigh on the Canadian dollar,” said Adam Button, chief currency analyst at ForexLive.

The report was the first public sign of tension inside government over how to handle the pandemic. Canada has provided more than $212 billion in direct COVID-19 support and nearly 14 per cent of gross domestic product in total support.

Canada’s budget deficit this fiscal year is expected to hit $343.2 billion, the largest shortfall since the Second World War.

Morneau is also under pressure over his failure to promptly repay travel expenses covered for him by a charity at the heart of an ethics investigation. Although Morneau apologized, opposition legislators say he must resign.

“The bus has been rolling toward Mr. Morneau for weeks. Market participants understand that he has become a major political liability,” said Karl Schamotta, chief market strategist at Cambridge Global Payments.

But he added: “Rocking the canoe might increase downside risk for the loonie (the Canadian dollar) and for markets more generally. And a distracted government is the last thing the economy needs,” he said.