Finance Minister François-Philippe Champagne has announced that the government will present its upcoming budget on November 5. This will mark the second budget introduced during Prime Minister Mark Carney’s tenure and the second consecutive fall budget. Historically, federal budgets were typically released in the spring, but Carney made the shift to fall budgets last year.
Champagne revealed the budget timeline during Tuesday’s question period. The government’s spring economic update in April showed a reduced deficit for the previous fiscal year compared to initial forecasts. The projected deficit for 2025-26 was initially set at $78.3 billion, but the April update revised it down to $66.9 billion due in part to higher oil prices.
The Parliamentary Budget Office (PBO) recently adjusted its economic growth outlook, predicting a 0.9% real gross domestic product growth for this year and 1.5% for 2027. These figures are lower than the previous estimates issued in June. Annette Ryan, the parliamentary budget officer, cited “additional trade measures and ongoing uncertainty” as reasons for the revised forecast.
Following collapsed trade talks between Canada and the U.S. and the imposition of new tariffs, the PBO now anticipates a $63.3 billion deficit for the 2026-27 fiscal year, peaking at $70.2 billion in 2027-28. The deficits are expected to be $3 billion higher annually on average from 2026-27 to 2030-31 compared to the June forecast, primarily due to new spending measures outweighing stronger revenues.
Although the budget outlook does not indicate a path to overall budget balance, Carney pledged to achieve an operating budget balance by 2027, a year earlier than previously planned. However, the PBO’s report suggests a delay in reaching this goal to fiscal year 2029-30.
With inflation on the rise in recent months, Canada’s annual inflation rate increased to 3.1% in September, attributed to higher fuel prices. Excluding gasoline, consumer prices rose 2.2% year-over-year. The PBO anticipates the Bank of Canada to begin raising its policy rate in early 2027 to maintain inflation expectations, reaching 2.75% by mid-year. 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 of 1-3%.
