Conservative cuts could tip Canada into recession

The Ottawa Citizen:

Ottawa — The Conservative government could tip Canada into a recession if it reduces federal spending by up to $8 billion, says an analysis by the union representing government economists and social scientists.

Claude Poirier, president of the Canadian Association of Professional Employees, said that if the Conservatives press ahead with spending reductions of $8 billion by 2014-15, Canada’s gross domestic product will fall by more than $10 billion and draw an embattled economy into a recession.

The results of the spending and operational spending review that will be announced in the upcoming budget have been kept under wraps under the guise of cabinet secrecy. With few details about the cuts, unions and other organizations have been struggling to estimate the job losses and their ripple effect on the Canadian economy.

CAPE launched its study months ago to get a handle on the economic impact of the government’s spending cuts. It was conducted by economists using data from Statistics Canada, as well as data generated by an economic model used by federal departments and agencies.

The union estimated the reductions could eliminate 116,000 jobs across the country, but it didn’t provide a breakdown of job losses in private and public sectors. It earlier estimated 110,000 jobs could disappear — including 50,000 in the public service — if the government opted for spending reductions of up to $8 billion rather than the $4 billion it was originally targeting. It will be releasing its findings on potential job losses later this month.

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