💸 Carney’s Budget: Big Spending, Big Deficit, Bigger Questions
Nov 9, 2025
Prime Minister Mark Carney’s first post-election budget lays out one of the most ambitious fiscal plans in Canadian history: $280 billion in infrastructure investment over the next five years, coupled with $60 billion in spending cuts and a new wealth tax targeting high-income households and capital gains. The budget includes major outlays for housing, clean energy, public transit, and high-speed rail, as well as incentives for companies exporting to Asia and Europe. It also sets aside funding for advanced manufacturing, artificial intelligence, and domestic processing of critical minerals, which Ottawa argues are essential to long-term sovereignty in an increasingly hostile trade environment. In presenting the plan, Carney described it as a “generational pivot,” intended to reduce economic dependence on the United States, build national resilience, and reorient Canada’s supply chains and productivity levers.
The plan certainly does not come without its risks and concerns, however. First, the government projects a $78 billion deficit for 2025–26, with the aim of reducing it to "only" $57 billion by 2030 (in comparison, the deficit last year was $11B). Moreover, in order to undertake such aggressive spending, the government will be "winding down pandemic-era programs" to reallocate funds toward more strategic sectors.
Responses have been (predictably) mixed (and partisan). Economists and business leaders have praised the long-term investment vision, but many caution that the plan may not be sufficient to offset the economic damage caused by U.S. tariffs and corporate relocations. Opposition parties argue that the budget offers little immediate help for workers and industries facing job losses, especially in Ontario and Quebec. Carney’s team maintains that long-term restructuring must take precedence over short-term relief, though the political risks of that strategy are growing.
Our Take
For the first time in over a decade, Canada has a federal budget that puts economic concerns first. While some may lament the erosion of social priorities, we believe the time calls for this type of sharp, fiscally-focused budget.
That said, the scale of investment Carney is suggesting does not come without its risks and question marks. Can the government really move at the speed Carney suggests it can? Can the government effectively manage such a large deficit without spooking markets or triggering inflation? Will the investments yield the promised productivity gains and trade diversification, or will they fall short amid global uncertainties? And can Ottawa maintain political support for a long-term strategy that may not deliver immediate benefits to those most affected by U.S. tariffs and economic shifts?
These are, obviously, important questions without immediate answers. However, we are soothed somewhat in knowing that Carney's formal area of expertise is economic policy - so we're willing to give him some room to manouver, and to take this leap with him on the 'go big or go home' adventure he's setting forth.
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