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

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, theCanadian 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 gainshave 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 toheightened 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, withlower revenue of $4.6 billion in 2020/21 compared to what was in the budgetand$7.7 billion more in spending.

Abounce-back of three per centgrowth 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 forrecovery.

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 provincialunemployment 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 onjobs, the provincial health officer's order to shut down bars and banquet halls earlier this week was necessary.

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