The COVID crisis and the Trudeau government’s numerous programs have come at a high cost to Canadians: the country experienced a staggering increase of 80% in its debt-to-GDP ratio, the highest percentage increase in all developed countries.
A debt-to-GDP ratio indicates the country’s total debt when compared to its economic output, or GDP. High debt-to-GDP ratios often come with a slowing economy and weak growth, and eventually leads to service cuts, tax hikes, austerity or default.
The data above shows the debt-to-GDP percentage increase, combining household debt, non-financial corporation debt and government debt.
In July, prime minister Trudeau declared that Canada took on debt so Canadian households “didn’t have to”.
This turned out to be false. Canada not only experienced the highest overall debt-to-GDP increase, but it also experienced the highest household debt to GDP increase.
Countries like Australia and Spain registered a lower increase in government debt while also managing to reduce household debt.
Meanwhile, Canada’s staggering debt hike has not helped the country get ahead of the recovery. Canada’s unemployment still lags behind other G7 countries.
Trudeau’s government failed to plan an effective and swift vaccine rollout, and Canada is still behind in the vaccination front as Quebec and Ontario, the country’s two most populated provinces, are still under strict lockdowns.
The unprecedented increase in debt for households, businesses and the government is likely to impede the country’s future growth dramatically. The recovery could stagnate and lead to an undesirable economic environment