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Economic Viewpoint

More Money, More Problems - What a Recession Could Mean for Ontario’s Budget Balance

November 1, 2022
Marc Desormeaux
Principal Economist

  • Ontario policymakers are at a crossroads as the province releases its Fall Economic Statement (FES) on November 14.
  • Supported by two consecutive annual revenue windfalls, Ontario ran its first surplus since before the Global Financial Crisis in fiscal year 2021–2022. This creates some room for new policy measures and could put the government in position to sustainably balance the budget ahead of schedule.
  • But the province is also staring down the barrel of a recession, which we estimate could drain more than $8 billion in revenues from government coffers over the next two fiscal years, increase debt and deficits, and delay surplus by a year.
  • Any new policy to improve affordability should target lower-income Ontarians most impacted by elevated inflation. The government could also consider outlining plans for future revenue windfalls, in the event they occur again in the coming fiscal years.