How long will B.C. deficit last? Economist says that’s hard to predict

VICTORIA (NEWS 1130) – It shouldn’t be a surprise the B.C. government is swimming in red ink, given the circumstances. But how long we’ll be using the word “deficit” when it comes to the province’s finances is pretty tough to forecast.

Bryan Yu — an economist with Central 1 Credit Union — says you can expect more deficits in the years ahead.

“The economy, itself, isn’t in a very healthy state. It’s going to recover over time, but we’re not going to get back to where we were in the pre-COVID level until the summer of 2022,” he tells NEWS 1130.

On Tuesday, the province announced it was expecting a $12.5 billion deficit by the end of the fiscal year. This is all because the province has been spending more money than has been coming in amid the COVID-19 pandemic, which brought sweeping closures to most industries and put thousands of British Columbians out of work.

Related article: B.C. expecting $12.5B deficit due to coronavirus

As a result, people were spending less money, and fewer tax dollars were being collected.

Yu says with so many unknowns, he agrees with Finance Minister Carole James that you can’t look too far ahead during a health crisis like this one.

“The issue is we don’t know if there’s a second wave of the virus occurring and how the government response to that will be. We’re also watching very clearly what’s happening in the U.S. and other countries right now,” Yu explains.

Related article: B.C. Liberals want sales taxes halted, spending boosted to help COVID-19 recovery

And if you’re worried that a deficit could mean your taxes going up, James has indicated there are no plans to do that.

The situation, Yu notes, may not necessarily be a bad thing for the average B.C. family.

“We are seeing governments fill in, sort of, the gaps right now for households. So, on that end, it’s a positive. Provides that support for households as we’re navigating the pandemic response right now.”

The deficit B.C. is forecasting is a world away from the $227 million surplus the province had projected before the coronavirus outbreak hit the country.

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