Prime Minister Mark Carney is scheduled to present his government's first federal budget on Tuesday. The budget is expected to outline significant spending cuts and investments, aiming to strengthen the economy and reduce reliance on US trade. It will also detail how Canada plans to fund increased defense spending to meet NATO commitments. The fiscal plan follows Carney's statements regarding economic transformation and balancing the federal operating budget.
Budget Overview and Economic Goals
Prime Minister Mark Carney is set to present his government's initial federal budget on Tuesday. He has indicated that Canadians should expect "sacrifices" as the government seeks to transform the economy, which has been impacted by US President Donald Trump's tariffs. Carney stated the spending plan will include cuts and investments designed to strengthen the economy and lessen the country's dependence on US trade.
The fiscal plan marks Prime Minister Carney's initial budget presentation as leader. A former central banker for Canada and the UK, he has stated his aim to make Canada's economy the strongest in the G7 group of wealthy nations. In a pre-budget speech last month, he remarked, "We used to take big, bold risks in this country. It is time to swing for the fences again."
Fiscal Projections and Defence Spending
The budget is expected to detail funding for billions of dollars in defence spending to meet a new NATO commitment. This commitment involves spending 5% of GDP on defence by 2035. Analysts have suggested the federal deficit could exceed C$70 billion ($50 billion; £38 billion), an increase from C$51.7 billion last year.
Trade Strategy
Canada, which primarily trades with the US, has particular exposure to tariff shocks. Carney has set a goal for the country to double its non-US exports within the next decade. Joy Nott, a partner at KPMG Canada focusing on trade and customs, indicated that "Canadian companies need government support during the transition of moving from one market to another." This support includes funding for trade missions abroad, market research, and navigating regulatory approvals when entering new markets. Ms. Nott noted that it requires time and money to overcome "those historic hurdles that we've seen, that prevented them from doing it."
Budgetary Measures and Ministerial Directives
Finance Minister Francois-Philippe Champagne emphasized a "made-at-home" message on Monday during the traditional pre-budget purchase of new shoes. He bought the footwear at a Quebec business that supplies products globally, as well as to Canada's armed forces and RCMP officers. While at the company's manufacturing facility, Champagne stated, "We're moving from reliance to resilience, from uncertainty to prosperity, we're going to do the kind of things that make this country stronger."
While Champagne indicated the budget would focus on "investments," Carney has also committed to balancing the federal operating budget—day-to-day spending on government programs—over the next three years. Over the summer, federal ministries were directed to identify ways to reduce program spending by up to 15% in the coming years. This initiative aims to generate savings for investments in areas such as trade infrastructure, housing, and industries impacted by tariffs.