Prime Minister Mark Carney is set to present his government’s first federal budget, promising to transform Canada’s economy into the strongest within the G7 group of wealthy nations. This step addresses a challenging new economic reality. The backdrop is a large U.S. federal deficit and recently imposed tariffs on China by the United States.
Carney’s administration anticipates that Canada’s federal deficit could exceed C$70 billion (approximately $50 billion), a substantial increase from last year’s deficit of C$51.7 billion. The Prime Minister has set very ambitious goals for the country, including a goal to double non-US exports over the next 10 years.
In the space of a few months, Canada has suffered a litany of heavy economic blows. Former President Donald Trump’s 35% tariff on all Canadian imports has been perhaps the biggest culprit. Most Canadian goods would still be exempt from these tariffs thanks to the US-Mexico-Canada free trade deal. With escalating trade uncertainty, fortunes have turned. Unchecked unemployment rates are rising and economic growth has stagnated.
Carney’s Liberal Party will require support from other parties to pass the spending package necessary for implementing these budgetary plans. The Prime Minister has already started warning Canadians to prepare for other “sacrifices.” The government is resolved to re-energize the economy that has been affected by external shocks.
In addition, federal ministries need to get their spending priorities in order. Most enforcement agencies have been expressly directed to reduce spending on programs by as much as 15%. Even with these cuts, the federal government intends to invest over $200 billion in trade infrastructure, affordable housing, and industries hit hardest by tariffs.
Of this challenge, Francois-Philippe Champagne, Minister of Innovation, Science and Industry made the point that during this transition, resilience will be key. He stated that the nation is moving “from reliance to resilience, from uncertainty to prosperity,” aiming to undertake initiatives that strengthen Canada as a whole.
The Defence Investment Plan seeks to meet Canada’s NATO 2030 pledge of raising defense spending to 5% of GDP by 2035. This commitment is part of a larger, whole-of-government strategic effort by the administration to strengthen national security in tandem with economic security.
Joy Nott, a board member with the Canadian Global Trade Network, underscored that government support is critical to business. Such support is crucial as businesses steer through this transformation. She noted, “Canadian companies need government support during the transition of moving from one market to another,” highlighting the challenges many firms face.
Carney is preparing to roll out his budget. It’s time for Canada to dream big again, he argues. We were once an ambitious, risk-taking country on a grand scale. Time to go back to the whole ballpark. So foolish, he chastised last month in a speech before the federal budget.
The political landscape is still quite unstable as another failed budget vote might result in a snap election. Therefore, Carney’s first budget presentation next week will be one of the most important to lay the foundation for Delaware’s economic revitalization and his party’s continuance of governance.