Prime Minister Mark Carney is set to deliver an economic speech to Canadians on Wednesday, just two weeks before the hotly anticipated federal budget.
It will come as a new report from Desjardins estimates the federal budget deficit could be the highest in 30 years, outside of the Great Recession and Covid-19 pandemic years.
The federal government is expected to deliver its budget on Nov. 4, which will include details on Canada’s defence spending commitments, as well as a clearer picture of how high the deficit could climb.
It isn’t clear yet exactly what details for the economy Wednesday’s speech may include, but it comes amid growing warnings that Canada will see a significant deficit.
Ottawa’s fiscal watchdog estimated last month that the annual deficit could climb to $68.5 billion this year.
Carney’s office says the public address will detail “Canada’s plan to build a stronger economy,” while Canadians await updates on trade discussions with the United States.
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This comes as the trade war continues to hamper the economy and job market, with negative impacts tied to U.S. President Donald Trump’s tariff policies in addition to those imposed by China.
Carney is scheduled to deliver his address at 7:30 p.m. Eastern time.
Desjardins on the budget deficit
Desjardins in a new report on Wednesday estimated the federal budget could climb past $70 billion this year, depending on what additional details are revealed.
Desjardins says the federal deficit could be the largest in 30 years, outside of recession and pandemic years.
The firm cites data measuring the expected ratio of budget deficits as a percentage of Gross Domestic Product, which means how the government’s debt compares to the amount the economy produces.
In its federal budget preview, Desjardins says the rising government deficit will be the result of an increase in spending and a decline in revenues.
Although the budget has yet to be released, Desjardins says Canada’s goal to increase spending on defence will “take centre stage,” combined with a drop in revenues after removing most counter-tariffs on the U.S. and tax cuts to individuals just before the summer.
“These spending increases wouldn’t have as substantial an impact on the deficit if it weren’t for the accompanying reduction in
tax and tariff revenues. By our estimate, the budget shortfall in the current fiscal year could exceed $70 billion —almost double that projected in the Fall Economic Statement 2024.”
“Defence should take centre stage in Budget 2025, but there is likely to be plenty of other planned spending between its covers.”
The Desjardins report goes on to describe additional spending plans that “are likely to have big price tags attached,” including on infrastructure, housing, and tariff impacted industries and workers.
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