How "aggressive" will Jim Flaherty be in today's economic-fiscal update? These are stories Report on Business is following Tuesday, Nov. 12, 2013. Flaherty to provide update Canada's finance minister is expected to largely stick to the playbook when he releases his economic and fiscal update this afternoon, but economists are watching for how "aggressive" he might be on the numbers. Jim Flaherty, who boasts one of the world's few remaining triple-A ratings, will release the fall update in Edmonton. And, as The Globe and Mail's Bill Curry reports, he's expected to show a fatter 2015-16 surplus than previously forecast. "The big question is not whether - but how much - the government will lower its projected deficit path over the next three years," said deputy chief economist Derek Burleton of Toronto-Dominion Bank. "The government is benefiting from a considerably better starting about (about $7-billion lower deficit in fiscal 12-13) than had been projected at the time of last year's budget," Mr. Burleton said. "Some of this improvement in the fiscal position going forward will probably be eroded by a moderate downgrade to the near-term economic outlook relative to last year's budget assumptions," he added. Corporate profits in particular have been soft, which will impact this year's bottom line. On the flip side, a downward adjustment to interest rate projections should represent a modest tailwind for the government's budget balance relative to its last forecast in the spring. In his last budget, Mr. Flaherty projected a 2014-15 deficit of $6.6-billion, and a modest surplus of $800-million a year later. But he's ahead of schedule, putting him in a stronger position today. "Revenues came in $2-billion ahead of plan while expenditures were $5-billion ahead of plan," said chief economist Craig Wright of Royal Bank of Canada. Given the more favourable starting point we think the plan to balance will be a little more aggressive now, suggesting smaller deficits over the near term and leaving the projected surplus for [fiscal year] 15-16 more convincingly in the black. Here's what some economists expect this afternoon: With growth almost bang on the budget assumption this year (1.6 per cent for 2013 real GDP), there's really little need for any course correction ... Perhaps the most notable item will be whether the projection of deficit reduction gets a little more aggressive, given that Ottawa just announced a few weeks back that year's deficit was materially better than expected in the March 2013 budget (at $18.9-billion versus the expected $25.9-billion. They had also looked for this year's deficit to drop more than $7-billion (to $18.7-billion), and then disappear two years later. I suspect the forecast will not change significantly, despite last year's pleasant surprise, and they will still be aiming to balance the books by [fiscal year] 15-16. Douglas Porter, chief economist, BMO Nesbitt Burns It's been a long time since a mid-year update had much content, so expectations are for a short statement that adjusts current year budget and economic forecasts. The latter draws from the consensus of private sector economists which is easy to find elsewhere. What will be closely watched is the extent to which the outgoing year's better-than-expected deficit carries through into an improvement in the 2013-14 projection. For the bond market, provincial budget balances are now more of the issue, with investors confident that Ottawa is well on track. Avery Shenfeld, chief economist, CIBC World Markets The projections will continue to be based on conservative economic assumptions with explicit produce remaining through the forecast horizon. As a result, any surprises will continue to be good surprises, i.e. smaller-than-expected deficits. RBC's Mr. Wright The government is likely to maintain its recent approach of building in roughly $3-billion per year in prudence that, if not used, would bring the budget even closer to a surplus as early as 14-15. Over the past few years, the government's success in beating its deficit targets has been primarily driven by surprises on the spending side of the ledger. The revised targets to be presented [today] will further assume only minimal gains in program spending over the next several years. While there is not likely to be much focus on policy, the government could remind Canadians of some of its prior pledges once the government reaches surplus. This includes a plan to income split. TD's Mr. Burleton