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Lower deficit revealed in spring update
Canadian Prime Minister Mark Carney announced a federal deficit for 2025-26 that is 14% below earlier forecasts, citing stronger-than-expected oil revenues and economic resilience amid global uncertainty.
Deficit details
The autumn budget had projected a C$78.3 billion shortfall for the fiscal year. The spring update revises that figure downward, though the government still expects deficits to persist for the next five years, settling near C$50 billion by 2031.
New spending and Canada's first sovereign wealth fund
Carney attributed the improved fiscal position to disciplined spending cuts, calling his administration "good fiscal managers." The savings are funding a C$25 billion sovereign wealth fund, the Canada Strong Fund, which will invest in energy, infrastructure, mining, agriculture, and technology.
The fund also allows individual Canadians to invest directly, offering an opportunity for those with extra savings to participate in national projects.
Economic outlook and risks
Despite the positive update, the government warned of long-term vulnerabilities, including U.S. tariffs and geopolitical tensions such as the U.S.-Israel conflict with Iran. The document noted that while economic growth is expected to continue, global uncertainty remains a significant risk.
"The economy is expected to continue growing, but the outlook is subject to heightened global uncertainty, including ongoing trade tensions and geopolitical risks,"
Government fiscal update
Measures to ease cost-of-living pressures
The update includes a temporary fuel tax break and a one-time grocery rebate for lower-income Canadians, both aimed at mitigating rising living costs.
Opposition criticism
Conservative Party leader Pierre Poilievre has sharply criticized the government's fiscal approach, arguing that persistent deficits are fueling Canada's affordability crisis.
"He's putting the nation's spending on the credit card, and he's forcing families to put their personal spending on their personal credit cards to pay for his high cost of living,"
Pierre Poilievre, Conservative Party leader
Poilievre called for significant spending cuts and a balanced budget, framing the government's debt as a burden on Canadian households.
