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OTTAWA — The federal government’s latest spending spree underscores the “sensitivity and fragility” of Canada’s fiscal position, where even a slight downshift in economic growth could cause debt levels to balloon, a new report warns. A new forecast by Alexandre Laurin and Don Drummond of the C.D. Howe Institute, released Thursday, frames the Liberal’s 2021 budget as a risky gamble for future economic growth, where debt levels as a percentage of GDP are expected to continue ticking upwards. According to C.D. Howe’s baseline scenario, Ottawa’s debt-to-GDP ratio will increase to 60 per cent by 2055, or roughly 10 per cent higher than today. That is higher than the government’s own estimates, which even under its most pessimistic outlook sees debt-to-GDP falling to around 40 per cent over the same period. “It’s a roll of the dice,” said Drummond, an author of the report who held several senior positions in the Department of Finance over his 23-year career. “It kind of comes down to which philosophy: do you believe history repeats itself, or that this time is different?”

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