Fraser Institute News Release: 7-in-10 provinces had combined government debt burdens that exceeded the size of their entire economies in 2022, curbing economic growth

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VANCOUVER, British Columbia, Nov. 07, 2024 (GLOBE NEWSWIRE) — Combined federal and provincial government debt in seven provinces exceeds the value of all goods and services produced in those provinces through 2022, dampening economic growth and living standards, according to a report. A new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think tank.

“When government debt grows so large that it is larger than the full value of the economy, additional debt not only provides no benefit to economic growth, it actually hinders it and stagnates living standards,” said Jason Childs, a senior fellow at Harvard University. Fraser Institute and author The impact of government debt on economic growth in Canadian provinces.

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The study concluded that once government debt exceeds 100 percent of GDP, more debt does not help the economy grow.

In fact, high levels of government debt can crowd out private investment, raise interest rates and drive inflation, reducing economic growth rates.

Nationally, only British Columbia (79.2%), Saskatchewan (77.5) and Alberta (63.8) had a combined federal and provincial government debt level below 100% of GDP in 2022, although concerns have been raised about the trajectory of B.C.’s debt accumulation. . Manitoba had the highest debt-to-GDP level at 141.4 per cent, closely followed by Quebec at 141.3 per cent.

“When our economies grow, Canadians benefit from higher standards of living, but it is clear that large government debt burdens across the country are holding back those gains,” said Jake Vos, director of financial studies at the Fraser Institute.

“Policymakers must prioritize balancing their budgets and paying down debt to help stimulate greater economic growth to the benefit of all Canadians.”

Media communication:
Jake Voss, Director of Financial Studies
Fraser Institute

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Grape McPherson
(604) 688-0221 ext. 721
drue.macpherson@fraserinstitute.org

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The Fraser Institute is an independent Canadian public policy research and education organization with offices in Vancouver, Calgary, Toronto, Halifax and Montreal and linked to a global network of think tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and communicating broadly the impacts of government policies, entrepreneurship and choice on their well-being. To protect the institute’s independence, it does not accept government grants or contracts for research. Visit www.fraserinstitute.org

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