Lower Deficits Contingent Upon Trade, Interest Rates and Geopolitical Stability
This GRI analysis of the federal government’s 2026 Spring Economic Update reviews key elements of the document through a macroeconomic lens, and highlights associated risks including trade uncertainty, geopolitical shocks and fiscal performance. The update projects a deficit of $66.9 billion for 2025-26, ($11.5 billion lower than Budget 2025 estimates) and $65 billion for 2026–27.
While the federal assessment is based on conservative planning assumptions, Canada’s fiscal trajectory is still highly contingent on external conditions like trade, interest rates and geopolitical stability. Overall, spending and revenue projections reflect an effort to balance near-term support to households and businesses with longer-term fiscal discipline to ensure fiscal sustainability.