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Alberta and N.L spill red ink, and the Bank of Canada has a rethink: BUSINESS WEEK WRAP


Two Canadian provinces revealed their budgets this week, and they showed very divergent strategies to the same problem: how to fill the hole left behind by cheap oil.

Newfoundland and Labrador unveiled a budget on Thursday with a $ 1.8 billion deficit, one of the largest in the province’s history, caused by a huge drop in revenues because of persistently low oil prices.

Alberta has been hit by the same slowdown, and posted an even larger deficit — $ 10.4 billion in the red.

But while the two provinces share the same illness, it was interesting to watch them prescribe vastly different solutions this year. Alberta laid out new money for families, for low-income Albertans, for small business and for investors in an attempt to stimulate the economy.

Newfoundland and Labrador, on the other hand, took the austerity route, raising taxes and fees on just about everything and cutting services.

Although Newfoundlanders knew a tough budget was in the works, the details were still a shock to some.

“My reaction when I heard what they’re doing right now is three-fold,” Memorial University professor Wade Locke “One was — wow, I was surprised at how big the cuts and taxes are. Two was holy —  and you can put whatever four letter word you want into it — and the other reaction was this is just one shoe that’s going to drop and the other one is going to drop in the fall.”

Two very different plans to deal with similar problems. Should be interesting to watch how it all turns out.

Bank of Canada stands pat

Another of the week’s biggest stories came on Wednesday when the Bank of Canada opted to keep its benchmark interest rate steady at 0.5 per cent.

The decision itself was no surprise, but it’s always fascinating to listen to the central bank to hear their views on which way the economy is headed.

The bank’s overall tone was one of cautious optimism, as it hiked its forecast for growth this year. But the bank took pains to not be too cheerful, which caused many to suspect the bank is trying to talk the loonie back lower.

“The Bank of Canada had a very difficult policy communication challenge here,” Manulife’s chief economist Francis Donald said. “They had to acknowledge that growth was better but they don’t want too strong a Canadian dollar. We have to remember, there are some good things that come with a weak Canadian dollar, and that is that our exports and manufacturing sectors do well, but the problem is it can be really difficult on consumers and on businesses who have to import a lot of things.”

“You want a sweet spot there,” Donald said.

North Carolina backlash continues

There was more bad news for North Carolina this week as the backlash to the state’s recent anti-LGBT law kept going. First it was PayPal and Lionsgate taking their business elsewhere

Transgender Restrooms Protest

More backlash against North Carolina’s anti-gay law was one of the biggest business stories of the week. (Chris Seward/Associated Press)

Then this week Deutsche Bank announced it was putting a planned expansion that would have added 250 jobs there on ice.

The most high-profile part of the law is a so-called bathroom law that requires people in the state to only use washrooms that match the gender on their birth certificate.

More than a hundred businesses have voiced their opposition to the law, and are putting their money where their mouths are. That’s rare for corporations, and a sign that social activism from the corporate world is gaining steam.

“I don’t think it’s very risky, but it is a trend,” business professor Maurice Schweitzer at the Wharton school said this week. “It’s a shift from where corporate activism used to be, much more narrowly focused on the business, and here we’re seeing this shift towards social activism.”

“It’s a really interesting trend.”

Other stuff

Those were just a few of our more popular stories this week. Check out our landing page for more, and don’t forget to follow us on Twitter here. 

In the meantime, here’s a day by day of our best stories of the past seven days.

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