I know you can’t bear the suspense. The award for “Best Prepared Country Going Into the Crisis” goes to… Canada. And what a goodie-two-shoes economy it turns out to be.
The more you look at this country’s numbers, the more you understand why Gordon Brown relegated Canada to “second tier” status in the diplomatic preparations for the Summit. It was the only bit of one-upmanship with the Canadians he could still win.
Next time the prime minister talks about every country being brought down by this crisis – or the chancellor suggests that everyone made the same mistakes – remember Canada. Nowhere is immune, but by most key measures, the Canadians are coming out of this crisis in a league of their own.
Take the banking system. Canada’s banks have not just had fewer bailouts than other countries. They’ve had none. Zero. Not a dime.
That may change – the five banks that dominate Canada’s banking sector have had to write down large losses on subprime and the like. But so far they’ve done without government handouts. And they have raised about £5bn in equity since October. Their shares have fallen sharply, but by 40-50% – not 80-90% as they have in Britain and the US.
As the FT pointed out today, of the seven institutions in the world that still retain a triple-A Moody’s credit rating, two are Canadian banks. And as their competitors have tumbled, so they have ascended the global rankings: all five Canadian banks now rank in the world top 50.
Didn’t they pay a price for that boring banking – the distinct lack of securitisation and innovation? Well, it’s true, Canada didn’t have a nationwide house price bubble in the lead up to this crisis. And they didn’t have the same kind of rise in personal debt. That’s one reason the IMF used words like “resilient” and “well-placed” in its latest survey of the country’s prospects.
You can see the results of this rather old-style approach in Canada’s boringly consistent rate of growth. On average, between 2001 and 2007, its economy grew by 2.6%.
Across the ocean, the City was a hotbed of global financial innovation, and we were riding a heady stock market and housing boom on a sea of debt. The result? Average economic growth between 2001 and 2007 of, er, 2.6%.
Of course, Canada has been hit by this crisis – about a third of its GDP is taken up with exports to the US. The economy shrank slightly last year and the consensus is for a decline of 1.8% this year. But it looks set to have the shallowest recession of all the G7 economies, with the smallest decline in activity in 2009 and fastest growth in 2010.
Despite the openness of its economy, Canada has not even been part of the global trade imbalances I keep going on about. It had a modest surplus in the years leading up to the crisis – now it’s moving into deficit.
I’m sure someone will write to tell me the blot on Canada’s economic record, the fatal policy error that will cause me to sheepishly revoke its award in a few days’ time. But I haven’t found it yet.
Its sober management of the public finances has even left it room for a decent-sized stimulus package for this year and next. Net debt last year was an irritating 22% of GDP.
And the most impressive thing of all about Canada’s position is that you are probably reading about it for the first time. Canadians are so sensible they even have the sense not to brag, in case things turn out badly for them after all.
If the UK had these vital statistics, by now the world would be sick of hearing about them. But on top of everything else, the Canadians have guarded against hubris as well.
Goodie-two-shoes is right. If I were Gordon Brown, I’d be wishing Canada wasn’t coming at all.