MNI BRIEF: Carney’s Liberals Projected To Win Canada Election

Mark Carney’s Liberals are projected to win Canada’s election though local TV networks split on whether initial results will be confirmed as a minority of seats after the former BOC and BOC Governor campaigned on pushing back against Donald Trump’s trade threats and running bigger deficits to encourage energy projects.

Carney has the party on track to win 165 of 343 House of Commons seats according to Elections Canada data as of 1:20am EST Tuesday. The CTV network projected a minority government and CBC hasn't made a call. Conservatives led by Pierre Poilievre were poised for 147 seats, though early results show he's at risk of losing his own seat. The two-way race squeezed the NDP to 7 seats and the BQ to 23. 

The campaign finishes a stunning turnaround since Carney took over from Justin Trudeau on March 10 when polls showed Liberals trailing by double-digits. Voter attention then swung to managing a U.S. trade war instead of anger over how Liberals handled a housing and cost of living squeeze. (See: MNI: Canada Will Struggle To Wean Off U.S. Trade Dependence)

Carney played up his record dealing with economic crises and blunted perceptions he was tied to Trudeau by killing a carbon tax and mirroring Conservative pledges to lower income and capital gains levies. Those commitments and a promise to lift defense spending to the NATO target of 2% of GDP will boost the budget deficit to 2% of output this fiscal year instead of the earlier Liberal “anchor” for a 1% limit. Carney’s platform calls for a CAD62 billion deficit this fiscal year.

The budget faces more pressure in any prolonged trade war the BOC says could push the country into recession. The projected Liberal deficit in the fiscal year that began April 1 is a record on a cash basis excluding the pandemic. Carney has said in an upside scenario the budget could balance in four or five years. 

Other Liberal pledges include doubling the pace of homebuilding, a goal industry experts say is nearly impossible, shifting resources from social spending to investment, and turning Canada into a major global exporter of conventional and green energy. (See: MNI INTERVIEW: Carney Short On 'Big Bang' Reforms- Jack Mintz)

Carney’s diplomacy will be tested when he hosts Trump at a G7 summit later this year. Carney says he will enter comprehensive trade talks with Trump shortly after the election, and Canada has limited scope to escalate a tariff war given the U.S. economy is much larger, while saying he won’t give in to Trump’s more aggressive trade demands.