Finance Minister François-Philippe Champagne has announced that the government will present its latest budget on November 5th. This will mark the second budget during Prime Minister Mark Carney’s tenure and the second consecutive fall budget introduction. Traditionally, the federal budget was unveiled in the spring, but Carney opted for a fall release last year.
Champagne revealed the timing of this year’s budget during Tuesday’s question period. The government’s spring economic update in April indicated a reduced deficit for the previous fiscal year compared to initial forecasts. Originally projected at $78.3 billion for 2025-26, the deficit was revised to $66.9 billion in April’s update, partly due to increased oil prices.
Simultaneously, the Parliamentary Budget Office (PBO) revised its economic growth outlook downward for this year and the next. The PBO now forecasts a 0.9% real GDP growth for this year and 1.5% for 2027, down from previous estimates of 1.1% and 1.6%, respectively. Annette Ryan, the parliamentary budget officer, cited “additional trade measures and ongoing uncertainty” for the adjusted forecast.
The PBO’s latest report indicates a projected budgetary deficit of $63.3 billion for the 2026-27 fiscal year, peaking at $70.2 billion in 2027-28. Despite the deficits being $3 billion higher annually on average from 2026-27 to 2030-31 compared to previous estimates, Carney remains committed to balancing the operating budget by 2027, a year earlier than initially planned.
However, the PBO’s report suggests that Ottawa may not achieve this goal until fiscal 2029-30 due to discrepancies in defining operational versus investment spending. As inflation has risen in recent months, with Canada’s annual rate reaching 3.1% in September, the upcoming budget presentation is crucial. The PBO anticipates the Bank of Canada to raise its policy rate in early 2027 to manage inflation expectations. Energy prices are expected to keep inflation elevated at 2.8% in 2026 before easing to 2.4% in 2027, aligning with the Bank of Canada’s inflation target range of 1-3%.
The government faces challenges in balancing the budget amid economic uncertainties and evolving inflation rates, which will likely shape the upcoming budget’s priorities and allocations.
