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Section 2: Economic events
Archived Content
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Canada
The Bank of Canada cut its key interest rate from 1% to 0.5%, its lowest on record.
The Federal and Ontario governments joined the US and dismissed recovery plans submitted by GM and Chrysler for their Canadian operations. Canada agreed to provide a temporary backstop of $3 billion to GM and $1 billion to Chrysler for 60 and 30 days, respectively, in conjunction with the US.
The Ontario government tabled its 2009-10 fiscal year budget with a forecast deficit of $3.9 billion in the current year and $14.1 billion in 2009-10. Highlights include a 1% cut in the personal income tax rate on the first $36,848 earned, increased spending of $27.5 billion for infrastructure and $700 million on worker retraining. As well, effective July 1, 2010 there will be a 13% harmonized value-added tax (combining the 8% provincial sales tax and 5% GST) and a drop in the corporate tax rate to 12% from 14%.
New Brunswick revealed its budget with a projected deficit of $265 million in the current year, rising to $750 million next year. Highlights include cuts in both personal and corporate taxes, increased service fees, and incentives for both the forestry and energy sectors.
Saskatchewan’s budget forecast a $425 million surplus, a $103 million cut in education property taxes and a 12% spending increase.
Quebec tabled a budget with a $3.9 billion deficit, a 1% increase in its sales tax to 8.5% on January 1, 2011, additional funding for forestry, infrastructure, energy and worker retraining, and tax deductions for private investment in Quebec-based businesses.
Bombardier announced a $1.44 billion (US) sale of jets to an Irish-based supply leasing firm and a $1.53 billion (US) sale to Deutsche Lufthansa AG.
Canadian Natural Resources began production at its $9.7 billion Horizon oil sands project, which plans output of 110,000 barrels a day.
Sunor made a $19 billion all-stock offer for Petro-Canada.
Tembec announced temporary shutdowns of sawmills, newsprint and forestry operations in northern Ontario, affecting 510 workers.
World
The US government gave GM 60 days of financing to submit another recovery plan and Chrysler 30 days of financing to complete a merger with Fiat. The government also forced the resignation of GM’s CEO and several board members and announced it will cover auto warranties in case of bankruptcies. A $5 billion Supplier Support Program was created for auto parts makers with funds from TARP.
Honda announced it is offering voluntary buyouts, cutting workers’ pay and imposing an additional 13 non-production days at its plants in Canada and the US to reduce output by 62,000 vehicles.
The Bank of England cuts its Bank Rate by half a percentage point to 0.5% and announced a $106 billion (US) asset purchase program.
The Federal Reserve announced it will buy up to $300 billion (US) of longer-term treasury bonds over the next six months and an $850 billion expansion of its program to buy mortgage-related securities.
