Canada’s new federal budget projects a deficit of C$78.3 billion this year, the second-highest on record, as the government outlined a broad economic plan aimed at responding to global trade challenges and domestic pressures.
The budget, introduced on Tuesday by Prime Minister Mark Carney and Finance Minister François-Philippe Champagne, proposes C$280 billion in spending over five years, including C$141 billion in new expenditures partially offset by roughly C$51.7 billion in savings.
The government sees the deficit as a strategic investment to boost competitiveness and attract up to C$1 trillion in investments over the next five years.
Key priorities include infrastructure projects, covering transportation, ports, electrical networks, and digital infrastructure, as well as funding for healthcare, national defense, housing, and productivity-enhancing initiatives.
Defence spending will rise, with C$81.8 billion allocated over five years to meet NATO targets, develop Canadian supply chains, enhance Arctic infrastructure, and invest in space-related capabilities.
Budget 2025 features a C$5 billion, five-year initiative to help Canadian businesses impacted by US tariffs. The funding is intended to support sectors such as steel, aluminum, lumber, and automotive, including a C$1 billion transition fund for the steel industry and a C$10 billion loan facility for other affected companies.
The government plans to implement a “Buy Canadian” policy for government procurement projects and has already raised C$6.5 billion from countermeasures against US tariffs.
Additionally, the budget signals a pivot away from the US, with measures included to support businesses entering new markets and incentives to attract international researchers to Canadian universities.
Additionally, the budget outlined measures to reduce costs and streamline government operations, including approximately 40,000 public sector job reductions over the next five years through attrition, layoffs, and automation. Federal departments may face cuts of up to 15%, with additional efficiencies pursued through AI and digital modernization.
Finance Minister Champagne described Budget 2025 as an “investment budget.” “We are making generational investments to meet the moment and ensure our country doesn't just weather this moment but thrives in it,” he said.
“This is our moment to build Canada Strong and our plan is clear – we will build our economy, protect our country, and empower you to get ahead.”