Prices are rising and many Canadians are taking on more debt to keep up, while a new study shows government debt has also climbed sharply since the 2008 financial crisis.
A Fraser Institute report says Canada’s combined federal and provincial net debt, adjusted for inflation, has nearly doubled from about $1.24 trillion in 2007–08 to a projected $2.44 trillion this year, an increase of almost 98 per cent.
Most of the increase comes from the federal government, which added about $712.7 billion in debt, much of it during the COVID-19 pandemic. Since 2019–20 alone, governments have added more than $600 billion in net debt.
The study says Canada has moved away from years of balanced budgets and is now in a period of rising deficits and borrowing. It also warns that debt is expected to keep growing in the years ahead.
The report notes that higher debt can lead to higher interest rates, which makes borrowing more expensive for businesses and can slow investment and economic growth. It can also limit government spending on services like health care and education because more money goes toward interest payments.
