Latest news with #economicoutput
Globe and Mail
a day ago
- Business
- Globe and Mail
As it hosts G7, Canada under pressure to further boost military spending by tens of billions
Canada is facing hard budget choices as it plays host to the Group of Seven summit starting Sunday and prepares for a looming NATO meeting where Western allies will be asked to commit to further defence spending hikes in the face of rising threats from Russia and other rivals. Defence and security will be an underlying theme at the G7 forum in Kananaskis, Alta., where all but one of the member countries also belong to the NATO military alliance, which is poised to cement a new defence spending pact at The Hague one week later. The G7 includes Canada, the United States, Japan, Britain, Germany, France and Italy. A bigger NATO military spending target will place steep new demands on the federal treasury at a time when Canada's economy is hurting from trade wars with the United States and China, the federal budget deficit topped $43-billion last year and after a significant injection of defence money this month. It was only June 10 that Prime Minister Mark Carney unveiled $9.3-billion in new funding for Canada's military and announced the country's defence spending would hit 2 per cent of Gross Domestic Product. That meets the existing North Atlantic Treaty Organization expenditure target and represents a level of spending not seen in Canada since the Cold War. NATO Secretary-General Mark Rutte has already announced that he expects member countries will agree to boost defence spending as a percentage of their annual economic output to 3.5 per cent. Plus, it's anticipated that NATO countries in late June will also agree to a separate but related target: a further 1.5 per cent of GDP for investments in security-related infrastructure and resources − for a total of 5 per cent. Opinion: Great new military spending, Canada. Where's the money going to come from? Hiking Canada's defence spending to 3.5 per cent of GDP would require Canada to spend an additional $45-billion to $50-billion each year on its military − above and beyond the investments that Mr. Carney announced this week, said David Perry, president of the Canadian Global Affairs Institute. At the same time, Mr. Carney's Liberals promised $20-billion over four years for nation-building projects including trade corridors, infrastructure and investments in the Arctic plus another $11.8-billion for housing through Build Canada Homes, a new agency for affordable housing. Recent polling by Nanos Research found 65.2-per-cent support among Canadians for raising spending to the current NATO target of 2 per cent but only lukewarm backing for a further boost to 5 per cent. Only 17.3 per cent of respondents embraced the higher benchmark. The poll of 1,120 Canadians was conducted June 1 to June 3 and is considered accurate to within 2.9 percentage points 19 times out of 20. Pollster Nik Nanos said public support for more military spending falls off beyond the current NATO target. 'Once we get beyond 2 per cent, politically, it's going to be much more difficult, because we might not be funding social programs or health care or other important priorities,' he said. 'And you know what the research suggests, at least now, is that things like jobs and the economy and health care are rising in importance.' He said Mr. Carney will have to persuade Canadians that further military spending will create more prosperity and jobs. He said the fact that U.S. President Donald Trump has linked increased defence spending and the Canada-U.S. trade relationship has made it easier to rationalize military budget increases in order to protect market access to the United States. Opinion: Can Canada have both guns and butter? Carney shows us, yes, we can Don Drummond, a former senior Finance Department official, said the federal government will have no choice but to raise taxes in the years ahead. He said Canada's finances are in a structural deficit that can't be solved by a growing economy and it's unfair to pass bigger debt loads onto future generations. 'The pot's not big enough: They only have two choices: cut transfers to provinces or raise taxes,' Mr. Drummond said of Ottawa. Personal and corporate income taxes are already too high, in his opinion, which only leaves the goods and services tax. Canada hasn't spent 3.5 per cent of its annual economic output on the military since the early 1960s. Few NATO countries have already surpassed 3.5 per cent. Among G7 countries, the United States was expected to hit 3.19 per cent in 2024, according to estimates in a recent NATO report. Britain was expected to reach 2.33 per cent, Germany, 2.10 per cent, France, 2.03 per cent and Italy 1.5 per cent. Japan, which embraced pacifism 80 years ago, has significantly hiked military spending in recent years and is on track to reach 2 per cent by 2027-2030. Former parliamentary budget officer Kevin Page said Canada could make defence spending a priority if it chooses. He noted that the Trudeau government made Indigenous people a priority and raised federal expenditures in this area by more than $50-billion annually over a 10-year period to more than $60-billion in 2023-24 He said he expects Canada to be on track to run a deficit of about $60-billion this fiscal year, depending on the fall federal budget. Mr. Page, now president of the University of Ottawa's Institute of Fiscal Studies and Democracy, said Canada has the fiscal margin of manoeuvre to keep running significant deficits given it's financially in better shape than some peer countries. Mr. Carney may be able to free up more financial capacity: the Liberal Party promised in the recent election campaign that it would attempt to save $28-billion over three years in spending cuts, including a cap on the size of the public service.
Khaleej Times
2 days ago
- Business
- Khaleej Times
UK economy shrinks by the most in nearly two years, ONS says
Britain's economic output contracted sharply in April in April, when shockwaves from U.S. President Donald Trump's announcement of wide-ranging tariffs hit the global economy, official data showed on Thursday. Gross domestic output shrank by a worse-than-expected 0.3% in April from March - the biggest monthly drop since October 2023 and a much bigger drop than the 0.1% fall forecast in a Reuters poll. "After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs," Liz McKeown, ONS director of economic statistics, said. A fall in real estate and legal activity in April after the end of a temporary tax break on house purchases contributed 0.2 percentage points of the 0.3 percentage point fall in output in April, the ONS said. Car makers also reported lower output and exports to both the United States and the European Union. Britain's economy expanded by 0.7% in the first quarter of 2025, outstripping growth in other countries in the Group of Seven advanced economies and prompting the Bank of England to revise up its full-year growth forecast to 1% last month. However, the BoE revised down its growth forecast for 2026 to 1.25% and said it expected the tariffs to knock 0.3% off British output in three years' time. BoE policymakers who are expected to hold interest rates next week are faced with competing forces of stubborn inflation and a relatively sluggish economy. A closely-watched business survey earlier this month suggested much of the economy returned to tepid growth. Business surveys of British firms have generally been downbeat and shown firms slowed their hiring and investment plans due to big increases in labour costs announced by finance minister Rachel Reeves last October. Data published this week showed a fall in consumer spending in May. The ONS said GDP in April was 0.9% higher than a year earlier, growing less than the 1.1% expected in the Reuters poll.
Zawya
2 days ago
- Business
- Zawya
UK economy shrinks by the most since 2023 as U.S. tariffs hit
LONDON: Britain's economic output fell sharply in April, reflecting shockwaves from U.S. President Donald Trump's announcement of wide-ranging tariffs and the end of a tax break on property sales, official data showed on Thursday. Gross domestic output shrank by a larger-than-expected 0.3% in April from March - the biggest monthly drop since October 2023 and more than the 0.1% fall forecast in a Reuters poll, following 0.2% growth in March. "After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs," Liz McKeown, the Office for National Statistics' director of economic statistics, said. A fall in real estate and legal activity in April after the end of a temporary tax break on house purchases contributed 0.2 percentage points of the 0.3 percentage point fall in output in April, the ONS said. Car makers also reported lower output and exports to both the United States and the European Union. British goods exports to the U.S. fell by 2.0 billion pounds ($2.7 billion) in April, the largest drop since monthly records began in 1997. Sterling fell by a quarter of a cent against the dollar on the back of the figures. Britain's economy expanded by 0.7% in the first quarter of 2025, outstripping growth in other countries in the Group of Seven advanced economies and prompting the Bank of England to revise up its full-year growth forecast to 1% last month. However, the BoE revised down its growth forecast for 2026 to 1.25% and said it expected the tariffs to knock 0.3% off British output in three years' time. BoE policymakers who are expected to hold interest rates next week are faced with competing forces of stubborn inflation and a relatively sluggish economy. A closely-watched business survey earlier this month suggested much of the economy had returned to tepid growth. Business surveys of British firms have generally been downbeat though and shown firms slowed their hiring and investment plans due to big increases in labour costs announced by finance minister Rachel Reeves last October. ($1 = 0.7376 pounds) (Reporting by Suban Abdulla and David Milliken; Editing by Muvija M)
Malay Mail
2 days ago
- Business
- Malay Mail
UK economy shrinks by the most in nearly two years, Office for National Statistics says
LONDON, June 12 — Britain's economic output contracted sharply in April in April, when shockwaves from US President Donald Trump's announcement of wide-ranging tariffs hit the global economy, official data showed today. Gross domestic output shrank by a worse-than-expected 0.3 per cent in April from March — the biggest monthly drop since October 2023 and a much bigger drop than the 0.1 per cent fall forecast in a Reuterspoll. 'After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs,' Liz McKeown, ONS director of economic statistics, said. A fall in real estate and legal activity in April after the end of a temporary tax break on house purchases contributed 0.2 percentage points of the 0.3 percentage point fall in output in April, the ONS said. Car makers also reported lower output and exports to both the United States and the European Union. Britain's economy expanded by 0.7 per cent in the first quarter of 2025, outstripping growth in other countries in the Group of Seven advanced economies and prompting the Bank of England to revise up its full-year growth forecast to 1 per cent last month. However, the BoE revised down its growth forecast for 2026 to 1.25 per cent and said it expected the tariffs to knock 0.3 per cent off British output in three years' time. BoE policymakers who are expected to hold interest rates next week are faced with competing forces of stubborn inflation and a relatively sluggish economy. A closely-watched business survey earlier this month suggested much of the economy returned to tepid growth. Business surveys of British firms have generally been downbeat and shown firms slowed their hiring and investment plans due to big increases in labour costs announced by finance minister Rachel Reeves last October. Data published this week showed a fall in consumer spending in May. The ONS said GDP in April was 0.9 per cent higher than a year earlier, growing less than the 1.1 per cent expected in the Reuters poll. — Reuters
Daily Mail
2 days ago
- Business
- Daily Mail
Showdown looming at key summit hosted by Anthony Albanese affecting millions of Australian workers
Business groups and unions are on a collision course over priorities for a planned productivity summit despite the prime minister's optimism they can find common ground. Anthony Albanese has dismissed suggestions the roundtable, which will take place in August and is aimed at finding ways to lift the nation's economic output, would amount to little more than a Canberra talkfest. 'It is not unreasonable to bring people together ... business and unions have common interests, we have a national interest in boosting productivity,' he told ABC Radio on Wednesday. But Australian Industry Group chief executive Innes Willox said it was disappointing the union movement had taken the view that 'there's nothing to see here and that is all about cutting jobs and cutting wages and it demonstrably isn't'. 'One of the frustrating conversations to have with unions is to hear them say: 'Yes, of course there'll be AI but everyone's job will stay the same,' he told Sky News. 'Unfortunately it won't but we have to prepare people for that - and that will be a massive exercise in reskilling and retraining ... that's where this productivity summit is going to be so important.' Experts are concerned about Australia's lagging growth in productivity - a key economic measure of efficiency and long-term driver of improved living standards. Working Australians must be at the centre of the summit, ACTU secretary Sally McManus said. 'We need to leave behind the idea that productivity is equated with cutting pay and making people work harder for less,' she said. Australian Chamber of Commerce and Industry chief executive Andrew McKellar said he was realistic about the potential for tangible outcomes at the roundtable. 'If it was easy, it would have been done already,' he told AAP. The scope of the Fair Work Act had grown significantly in recent years, which had a 'significant impact' on small businesses trying to hire staff, Mr McKellar said. Planned payday superannuation reforms also needed to be implemented in a way that didn't 'create a significant additional burden for small business', he added. 'We don't expect (the government) to revisit all of the industrial relations changes, but ... let's make some practical changes that make it easier for small business to create jobs and employ more people to promote productivity,' Mr McKellar said. Tax changes, cutting the regulatory burden and encouraging the uptake of digital technology would all be priorities for the business lobby, which singled out AI as a field that could make a big difference to productivity. Productivity Commission chair Danielle Wood said it was important to be clear the target was 'not about working longer hours'. 'When we're talking about labour productivity, all it means is producing more for each hour worked,' she told ABC TV. 'This is about making sure Australians have the skills, that they have access to the technology, that we have great business processes that allow all of us to get more out of each hour that we put in.' Higher productivity was ultimately what drove improvements in incomes and living standards, and technological change was the most important driver of growth, Ms Wood said. 'Australia is lagging in the adoption of AI ... so that's certainly one of the areas of opportunity that we will be looking to,' she said. The commission's most recent report showed labour productivity fell 0.1 per cent in the December quarter and dropped 1.2 per cent in the past year. Shadow treasurer Ted O'Brien said the opposition gave the government some credit for calling the summit. 'A round table. Yay!' Mr O'Brien joked during an interview on Nine's Today program. 'But look ... to be fair, at least they're recognising the problem ... so let's take that as a partial tick.'
