Canadian Prime Minister Mark Carney has introduced his first federal budget—a blueprint for how he plans to deliver on his promise to make Canada’s economy the strongest in the G7.
The ambitious plan is as much a political document as a spending blueprint. It warns that Canada is in an era of significant change not seen since the fall of the Berlin Wall, underscored by its rapidly shifting relationship with the US, once the country’s closest ally.
“There are some headwinds on the horizon,” Finance Minister François-Philippe Champagne told reporters in Ottawa. That's why we need a strong response. Here are six takeaways from the spending plan.
‘Sacrifices’ vs. ‘generational investments’
The budget includes billions of dollars in spending that could balloon Canada’s deficit to C$78.3bn – the second biggest on record. Carney and Finance Minister Champagne defend the massive spending plan, which will total C$280bn, as an investment meant to boost Canada’s global competitiveness.
The budget plans to fund highways, ports, electrical grids, digital corridors, defense, and housing initiatives aiming to enhance productivity. However, it also calls for C$60bn in total spending cuts over the next five years, including trimming 40,000 public sector jobs and reducing funding for federal ministries.
From trade to Eurovision: a global shift
Historically dependent on the US for about 70% of its trade, Canada is pivoting towards Europe and Asia post-Trump tariffs. Carney’s budget proposes millions in backing for companies working to explore new markets, with plans to lower Canada’s marginal effective tax rate to attract investment.
Additionally, C$1.3bn will be allocated to attract international researchers to Canadian universities, reinforcing Canada’s foothold in global research amidst US uncertainties.
Making Canada a ‘clean energy superpower’
In a bid to balance economic growth with environmental stewardship, the budget aims to develop low-emission energy projects like nuclear reactors and low-carbon natural gas while affirming its commitment to carbon pricing.
Sovereignty through defense - and space launch
With a commitment to increase defense spending to meet NATO targets, Canada plans to spend C$81.8bn over the next five years bolstered by new initiatives including space launch capabilities and strategic projects in the Arctic.
Undoing the Trudeau era
Carney is taking a sharp departure from previous policies, such as abolishing the consumer carbon tax and scaling back immigration targets after a decade of increasing influxes under Trudeau's administration.
Cushioning Canada from trade shocks
The budget outlines support for sectors impacted by the US trade war, including a proposed C$10bn loan facility for businesses facing tariffs. It also aims to prioritize Canadian goods for government projects, supported by countermeasures to US tariffs.
