Prime Minister Mark Carney is set to present his government's first federal budget on Tuesday, and has warned Canadians to expect sacrifices as he aims to transform an economy battered by US President Donald Trump's tariffs.
Carney has said the spending plan will see both significant cuts and generational investments to strengthen the economy and reduce the country's reliance on US trade.
The plan is also expected to lay out how Canada will pay for billions of dollars in defense spending to fulfill the new NATO commitment to spend 5% of GDP on defense by 2035. Analysts have suggested the federal deficit could exceed C$70bn ($50bn; £38bn), up from $51.7bn last year.
The fiscal plan is seen as a major test for Carney, a former central banker for Canada and the UK, who has promised to make Canada's economy the strongest in the G7 group of wealthy nations. We used to take big, bold risks in this country. It is time to swing for the fences again, he said in a pre-budget speech last month.
Carney aims to double non-US exports in the next decade amid significant tariff shocks, emphasizing that Canadian companies need government support during their transition from one market to another. The Finance Minister also highlighted the importance of prioritizing domestic production as he embarked on purchasing new shoes from a Quebec business.
While the budget focuses on investments, Carney has also promised to balance the federal operating budget over the next three years. The Liberal Party, running short of a majority, faces challenges in passing the budget without support from other parties, and political experts suggest the left-leaning NDP may play a crucial role in this process.
With Trump imposing significant tariffs on Canadian imports impacting major sectors, the economy is feeling the crunch, leading to rising unemployment. The Bank of Canada forecasts modest GDP growth in the coming years, indicating the need for the bold budget Carney is set to unveil.
Carney has said the spending plan will see both significant cuts and generational investments to strengthen the economy and reduce the country's reliance on US trade.
The plan is also expected to lay out how Canada will pay for billions of dollars in defense spending to fulfill the new NATO commitment to spend 5% of GDP on defense by 2035. Analysts have suggested the federal deficit could exceed C$70bn ($50bn; £38bn), up from $51.7bn last year.
The fiscal plan is seen as a major test for Carney, a former central banker for Canada and the UK, who has promised to make Canada's economy the strongest in the G7 group of wealthy nations. We used to take big, bold risks in this country. It is time to swing for the fences again, he said in a pre-budget speech last month.
Carney aims to double non-US exports in the next decade amid significant tariff shocks, emphasizing that Canadian companies need government support during their transition from one market to another. The Finance Minister also highlighted the importance of prioritizing domestic production as he embarked on purchasing new shoes from a Quebec business.
While the budget focuses on investments, Carney has also promised to balance the federal operating budget over the next three years. The Liberal Party, running short of a majority, faces challenges in passing the budget without support from other parties, and political experts suggest the left-leaning NDP may play a crucial role in this process.
With Trump imposing significant tariffs on Canadian imports impacting major sectors, the economy is feeling the crunch, leading to rising unemployment. The Bank of Canada forecasts modest GDP growth in the coming years, indicating the need for the bold budget Carney is set to unveil.
