12/28/2011 08:06 EST | Updated 02/27/2012 05:12 EST

Fiscal pressures to test McGuinty in 2012

The Ontario government is considering deep spending cuts and could delay planned corporate tax breaks in 2012, CBC’s provincial affairs reporter Mike Crawley reported in Wednesday’s look at the political year ahead.

Facing a weak economy and a deficit of about $16 billion, Premier Dalton McGuinty may find that winning the election in October was easy compared to governing, Crawley reports.

“The economy just happens to be growing at a much slower pace because of things that are happening outside our borders,” said McGuinty.

Powerful bond-rating agencies are threatening Ontario with a credit downgrade, adding more pressure on the governing Liberals to cut costs.

Early in the new year, economist Don Drummond will recommend ways the province can better control its spending.

Drummond, a former TD chief economist, has been hired to head up a commission that will examine ways Ontario can reform how it delivers public services, with an eye to reducing costs.

McGuinty, however, has said there will not be across-the-board spending cuts.

“I've branded that as lazy,” he said. “We need to reform the way we deliver our public services. We need to do that in a way that gets better value for the dollar.”

If the Liberals are to survive as a minority government, they will need to make spending cuts deep enough to please the Progressive Conservatives or a concession on corporate tax breaks that satisfies the NDP.