Canada deficit down $11.5B
- Finance Minister François-Philippe Champagne’s spring economic update put Canada’s 2025-26 deficit at C$66.9 billion, down C$11.5 billion from Budget 2025. - The update said Canada’s economy grew 1.7% in 2025, unemployment fell to 6.7% in March, and wages kept outpacing inflation. - Ottawa says tariffs and Middle East conflict still cloud the outlook. (budget.canada.ca)
Canada cut its projected 2025-26 federal deficit to C$66.9 billion in a spring economic update tabled April 28 by Finance Minister François-Philippe Champagne. (budget.canada.ca) (ici.radio-canada.ca) That is C$11.5 billion lower than the C$78.3 billion shortfall projected in Budget 2025. The government said stronger economic resilience improved the near-term fiscal outlook. (budget.canada.ca 1) (budget.canada.ca 2) The update said Canada’s economy expanded 1.7% in 2025, avoided recession, and kept domestic activity solid even as tariff increases and trade tensions weighed on growth. (budget.canada.ca) Labour data in the update showed unemployment falling to 6.7% in March from a 7.1% peak in September 2025. It also said wage growth has outpaced inflation for more than three straight years. (budget.canada.ca) Ottawa is using that fiscal improvement to fund new measures on affordability, housing, infrastructure and industrial policy. The spring package also includes a new Canada Strong Fund, described as a sovereign wealth fund capitalized in the near term with C$25 billion. (budget.canada.ca 1) (budget.canada.ca 2) The update also changes how Ottawa presents its fiscal calendar. Starting in 2026, the federal budget moves to the fall and the economic update shifts to the spring. (budget.canada.ca 1) (budget.canada.ca 2) The government’s own forecast says the better deficit picture does not remove the risks. Finance officials said the March 2026 survey of private-sector economists assumed current United States tariffs on trading partners, including Canada, would remain in place through the forecast horizon. (budget.canada.ca) The same forecast said the conflict in the Middle East has pushed oil prices higher and added to inflation and supply-chain pressure. It said uncertainty could still weigh on business investment and household confidence. (budget.canada.ca) Outside government, analysts struck a similar tone. Sahir Khan of the University of Ottawa’s Institute of Fiscal Studies and Democracy told Radio-Canada the government is sitting on a roughly C$60 billion windfall in part because of higher oil prices, but the global outlook remains tepid. (ici.radio-canada.ca) For now, the headline is simple: Ottawa’s books look better than they did in November, but the update says tariffs, oil shocks and geopolitics still set the limits. (budget.canada.ca) (budget.canada.ca)
