UPDATE 1-Carney's fiscal update shows smaller Canadian deficit, new spending

Canadian Prime Minister Mark Carney's fiscal update on Tuesday committed billions of dollars in new spending on a new skilled worker program and infrastructure and projected a smaller deficit for its last fiscal year. The government also forecast a solid ‌rise in revenues against its previous estimates, but intends to spend most of it on new programs and affordability benefits in coming years, the numbers showed.

Canadian Prime Minister Mark Carney's fiscal update on Tuesday committed billions of dollars in new spending on a new skilled worker program and infrastructure and projected a smaller deficit for its last fiscal year.

The government also forecast a solid ‌rise in revenues against its previous estimates, but intends to spend most of it on new programs and affordability benefits in coming years, the numbers showed. Carney's first fiscal update comes almost exactly a year after he won the federal election to lead the country. He has received high marks from the public for his handling of global affairs and ‌U.S. President Donald Trump's tariffs, though polls show Canadians want him to focus on lowering living costs.

Carney's first federal budget, presented by Finance Minister François-Philippe Champagne in ‌November, committed to substantially ramping up defense and infrastructure spending and saving billions of dollars in government operations as he pledged to make Canada less reliant on the United States. But economists expressed concern about the government's rising deficit and excessive spending, which they said the fiscal update does not strive to rein in over the long term.

Five months after the federal budget was presented, the fiscal update shows the ⁠government's deficit ​for the year ending March 2026 is ⁠likely to shrink by over 14% to C$66.9 billion. "I think what matters to Canadians today is that we have managed to lower the deficit," said Champagne, adding this came at a time of global ⁠uncertainty.

The government will also benefit from higher revenues, by an average of C$7.2 billion annually from 2025-26 to 2029-30, the fiscal update showed. Overall, the government sees additional benefits of over C$60 ​billion from higher income and corporate taxes and financial sector performance over the next five years, as well as higher oil prices, the fiscal update said.

However, ⁠as spending increases, the deficit stays almost as projected in November over a five-year period, barring the last fiscal year that ended in March 2026. 'DEJA VU'

The government plans to spend almost C$55 billion over ⁠the next ​five years, wiping off almost all of the income gain. "It's a deja vu," said Pedro Antunes, chief economist at Signal49, an independent economic research firm.

"We have not taken any advantage at all in improving our fiscal situation by reducing our debt financing cost or deficit over the next few years despite higher revenues," ⁠he said, adding the pattern echoes former Prime Minister Justin Trudeau's era. The government committed C$37.47 billion in additional spending measures in the fiscal update.

This includes approximately C$6 billion ⁠to recruit, train, and hire 80,000 to 100,000 ⁠new skilled trade workers by 2030-31, the government said. Additionally, the government committed more money for housing affordability, enabling trade, LNG facilities, defense spending, electric vehicle adoption and setting up a sovereign wealth fund.

Altogether, these measures, along with measures towards excise duty relief, grocery ‌rebate and other expenditure announced earlier ‌will cost the government additional spending of close to C$55 billion.