Terri Trask

• Canada’s federal Finance Minister tabled his second budget on November 5th. As broadly expected, it is a fiscally expansive plan (and then some).
• Budget 2026 carries a final price tag of a $151.2 bn over its five-year planning horizon (FY27–31), while showing a $158.3 bn in fiscal savings on the other side of the ledger. Big numbers on both sides of the balance sheet leave the bottom line nearly indiscernible from the spring update (~$7 bn improvement over 5 years).
• As a share of output, the deficit trajectory contracts marginally faster from an expected 1.8% of GDP this year to 1.3% by FY31 (~0.1 ppt annual improvement). The debt trajectory similarly shows a marked improvement with the level settling at 40.1% of GDP—for a 1.5 ppts improvement—relative to the spring projection.
• While backward looking, last year’s shortfall (FY26) showed a surprise improvement ($39.3 bn versus an earlier-projected $66.9 bn) owing to strong revenue tailwinds.
• A substantial share of new spending was expected—notably the pre-announced $36 bn Productivity Mega Deduction—that reflects about a quarter of the budget package. Investments in Indigenous infrastructure—at $26.6 bn is another component. Earlier-announced tariff relief, investments in connectivity infrastructure, and defence spending are also folded in. In total, a wide range of ‘investment’ related measures reflect almost 60% of the new spending package.
• The budget contains substantial measures for vulnerable households. On top of earlier-announced measures, the budget announces another top up to the Grocery benefit ($4.7 bn in 2027). There is also a substantial $16.5 bn in investments related to non-market housing and supportive infrastructure.
• Canada's continued investment push remains the right course but it compounds near-term inflation risk as the Bank of Canada begins removing accommodation. Continued fiscal expansion from other orders of government adds to that pressure.

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