Carney signals shrinking deficit

Mark Carney’s government says Canada’s deficit for the fiscal year that ended in March will be smaller than forecast. (cbc.ca) (canada.ca) The spring economic update, tabled April 28 by Finance Minister François-Philippe Champagne, puts the 2025-26 deficit at C$66.9 billion, down from the C$78.3 billion projected in November. (cbc.ca) (usnews.com) Ottawa says stronger tax revenue, higher oil prices and a more resilient economy lifted the fiscal outlook. The Department of Finance said Canada’s economy grew 1.7 per cent in 2025 and avoided recession. (canada.ca) (cbc.ca) The government says that improvement created an C$11.5 billion gain in the projected 2025-26 budget balance compared with Budget 2025. It says the average improvement before new measures is C$10.7 billion a year from 2026-27 through 2029-30. (canada.ca) Carney and Champagne are using much of that room for new spending instead of faster deficit reduction. CBC reported the update includes C$37.5 billion for newly announced measures. (cbc.ca) (usnews.com) The flagship labour measure is Team Canada Strong, a plan to recruit, train and hire 80,000 to 100,000 new skilled-trades workers by 2030-31. The government says it will spend C$6 billion over five years on that push. (canada.ca) (cbc.ca) The update ties that labour push to homebuilding and major projects. Finance Canada says Canada has 21 nation-building initiatives in the pipeline, with more than C$125 billion in new investment and 60,000 construction jobs. (canada.ca) Carney has also changed the budget calendar. CBC reported that Ottawa now delivers its main budget in the fall and uses the spring statement as the fiscal update. (cbc.ca) (canada.ca) The government still does not show a near-term path to an overall balanced budget. CBC said deficits remain above C$50 billion a year into 2031, even as Carney keeps promising to eliminate the operating deficit within three years. (cbc.ca) Reuters reported economists criticized that choice, saying higher revenues are being spent rather than used to bring borrowing down faster. Champagne said the lower deficit matters because it came during a period of global uncertainty. (usnews.com) So the message from Ottawa is two-track: the books look better than expected, and the government plans to keep borrowing while it builds. (canada.ca) (cbc.ca)