Prime Minister Mark Carney has promised that his first budget will be bold, ambitious, and “meet this moment” — although it could all cost a pretty penny.
The last time Ottawa provided a look at its books was in the fall economic statement of December 2024, an event largely overshadowed by then-finance minister Chrystia Freeland’s resignation and the eventual resignation of former prime minister Justin Trudeau.
At the time, Ottawa projected a $48.3 billion deficit for 2024-25, with a path toward reducing the red to about $23 billion by the end of the 2029-30 fiscal year.
Carney's government, ushered into office amid a trade war with the United States on a promise to reduce reliance on Canada’s neighbours down south, has suggested it likely won’t follow a similar path.
Here are a few things to know heading into budget day:
New format
During his election campaign, Carney pledged to balance the operating budget in three years, while running a deficit on capital spending for things like public transit, energy, and infrastructure.
It’s unclear how this will be laid out in the budget.
Kevin Page, a former parliamentary budget officer and president of the Institute of Fiscal Studies and Democracy, previously told Parliament Today that he estimates the capital spending deficit could be about $30 billion after three years, which would be “small” and less than a percentage of Canada’s GDP.
“I think they're just saying that there's different reasons for going into deficit, and some are more acceptable than others from a financial perspective and from an economic perspective. And I actually think that's a good thing.”
In the last quarter of 2024, Canada’s deficit was about 2.2 per cent of GDP.
According to an end-of-October 2025 update from the Department of Finance, the deficit sat at about $11.1 billion for the first five months of the 2025-26 fiscal year.
Higher spending on big projects
The prime minister has pitched his budget as being a balance between a call for austerity and, at the same time, investment. He’s also stressed that Canadians will need to make unspecified “sacrifices,” with ministers suggesting that could mean reducing the size of the public service.
“The fact is, even with such efficiencies and with better management, we will have to do less of some of the things that we want to do, so we can do more of what we must do to build a bigger and better Canada,” Carney said in October.
Investment opportunities include expediting nation-building projects chosen by Carney’s new Major Projects Office; the prime minister’s flagship housing agency, Build Canada Homes; billions on defence to help meet NATO targets; and a “strategic response fund” to help sectors impacted by tariffs.
At the same time, Finance Minister François-Philippe Champagne has suggested that the public service needs to be cut back to pre-pandemic levels, with the aim of making the government “leaner.”
To do so, Champagne directed the public service sector to cut spending by 15 per cent over three years. This, the government has said, is supposed to help balance some of the promised investments.
Opposition parties will be looking for program cuts that may offset the government’s larger investments.
Plan to meet NATO’s goals
During the spring election, Carney promised to meet NATO’s previous goal of spending two per cent of GDP on defence by March 2026.
This, the government has said, will cost about $9 billion more. Officials have already promised to boost pay and benefits for Canadian Armed Forces members and expand the Canadian Coast Guard’s mandate, although other investments, such as the purchase of new planes from the U.S., remain up in the air amid trade tensions.
Since Carney’s election, NATO has upped its defence-spending targets to five per cent of GDP by 2035, a target Canada has also committed to.
Defence Minister David McGuinty reiterated this pledge last month, indicating that Carney’s budget could outline a path toward reaching that goal.
Will the budget pass?
The federal budget is automatically considered a vote of confidence once it's tabled in the House.
In 2011, former prime minister Stephen Harper’s budget was outright rejected by all three opposition parties, launching the country into another election.
Canada’s three opposition parties have yet to say whether they will support Carney’s budget, with the Liberals indicating they are willing to fight in another election should the document be rejected.
“I am 100 per cent confident that this budget is the right budget for this country — at this moment,” Carney said last week.
So far, none of the opposition parties have said they would support the minority liberal government’s budget, although the Prime Minister’s Office has had meetings with party leaders in the lead-up to this week.
NDP interim leader Don Davies confirmed that his seven-member team will vote as a block, but told CBC News’ Rosemary Barton Live on a Sunday episode that it is possible some MPs could abstain or otherwise miss the vote.
CPC Leader Pierre Poilievre appeared to rule that out, telling Ottawa reporters over the weekend that his team will “show up and do our jobs to fight for an affordable budget.”
“Our hand is still extended, and there's still two days for Mr. Carney and the Liberals to reverse their costly promise-breaking ways,” he said Sunday.
Other promises the government has made that will likely be in the budget:
- A climate competitiveness strategy;
- Some details on the federal government's plan for immigration;
- An international talent-attraction strategy;
- Money to crack down on tax-evasion schemes in the trucking industry.
—With files from Palak Mangat