Finance Minister François-Philippe Champagne has announced that the government will present the upcoming budget on November 5. This will mark the second budget during Prime Minister Mark Carney’s tenure and the second consecutive fall budget, a departure from the traditional spring budget introduction prior to last year.
Champagne revealed the budget timeline during Tuesday’s question period. The government’s spring economic update, released in April, showed a reduced deficit for the previous fiscal year compared to initial projections. The deficit for 2025-26 was originally forecasted at $78.3 billion but was revised to $66.9 billion in the April update, partly due to surging oil prices.
This announcement coincided with the Parliamentary Budget Office (PBO) revising its economic growth outlook downwards for this year and the next. The PBO now anticipates real GDP growth of 0.9% for this year and 1.5% in 2027, lower than its previous estimates in June.
Annette Ryan, the parliamentary budget officer, cited “additional trade measures and ongoing uncertainty” as reasons for the revised outlook. The PBO also forecasts a budgetary deficit of $63.3 billion for the 2026-27 fiscal year, peaking at $70.2 billion in 2027-28.
Despite the revised projections, the deficits are expected to be $3 billion higher per year on average over 2026-27 to 2030-31, as new spending measures are anticipated to outweigh increased revenues. While there is no clear path to overall budget balancing, Prime Minister Carney aims to achieve an operating balance by 2027, a year earlier than initially planned.
However, the PBO’s recent report suggests that Ottawa may not achieve this target until fiscal 2029-30. The PBO has also highlighted discrepancies in how government departments distinguish between operational and investment expenditures.
As the inflation rate has been on the rise in recent months, the budget presentation comes at a critical time. Canada’s annual inflation rate reached 3.1% in September, with StatsCan attributing this increase to higher fuel prices. The PBO forecasts the Bank of Canada to initiate rate hikes in early 2027 to maintain stable inflation expectations.
The watchdog predicts that elevated energy prices will sustain a higher inflation rate in 2026, averaging 2.8%, before easing to 2.4% in 2027. The Bank of Canada’s inflation target range is between 1% and 3%.