British Columbia

B.C. forecasts $12.8B deficit in 2020-21

COVID-19 is affecting the province's bottom line according to the first quarter report released by Finance Minister Carole James.

First-quarter report shows how COVID-19 is affecting province's bottom line

B.C. Finance Minister Carole James delivers first quarterly financial report for 2020-21. (Mike McArthur/CBC)

The COVID-19 pandemic has pushed B.C.'s projected budget deficit to $12.8 billion, according to the first-quarter report issued for 2020-21.

Finance Minister Carole James said spending on the pandemic response and declines in tax revenue and natural resource income were factors.

"In the April to June period, the Canadian economy has seen the largest retraction on record," she said,"... and B.C.'s economy has been seriously impacted."

According to James, stronger than expected consumer spending, housing activity and employment gains have been offset by increased prudence built into the budget "to help B.C. weather the long road ahead."

A $1 billion forecast allowance is included in the updated budget to respond to heightened uncertainty brought by the pandemic.

The province has spent $7.6 billion on COVID-19 response measures since the beginning of the fiscal year.

"The pandemic has threatened lives and livelihoods, and our government responded with one of the most supportive, comprehensive action plans in the country," said James.    

B.C.'s annual real GDP declined 6.7 per cent in 2020, with lower revenue of $4.6 billion in 2020/21 compared to what was in the budget and $7.7 billion more in spending.

 A bounce-back of three per cent growth in real GDP is predicted for 2021.

James says despite the negative numbers, the province's strong financial footing pre-pandemic puts it in a good position for recovery.

She also cited improved jobs numbers as a reason for cautious optimism.

Last month, B.C. added 15,300 jobs and the unemployment rate dropped for a third straight month to 10.7 per cent. In February, before the pandemic hit, the provincial unemployment rate was just five per cent.

Young people and women continued to be hardest hit by the loss of employment.  

James says despite the negative effect on jobs, the provincial health officer's order to shut down bars and banquet halls earlier this week was necessary.

Our most important piece of rebuilding the economy is making sure we're protecting the health and safety of British Columbians," she said. "People need to feel confident going into those businesses."

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