Canadian Prime Minister Mark Carney announced on Wednesday that his government’s first budget will focus on reducing economic and security dependence on the United States while cutting wasteful spending.
Elected in April, Carney emphasized that the maiden budget will balance austerity with major investments, aiming to shield Canada’s economy from what he described as a crisis caused by a more protectionist U.S.
“The decades-long process of an ever-closer economic relationship between the Canadian and U.S. economies is over,” Carney said during a televised address to university students. “Many of our former strengths—based on close ties to America—have become our vulnerabilities.”
With U.S. tariffs hitting Canada’s steel, aluminum, and automotive sectors, Carney pledged to double non-U.S. exports over the next decade, potentially adding C$300 billion to the economy. He also promised significant increases in defense spending and investments in housing infrastructure.
However, the government faces fiscal pressure due to previous tax cuts, the removal of retaliatory tariffs intended to negotiate with U.S. President Donald Trump, and relief measures for industries affected by tariffs. As a result, Carney has instructed all ministries to reduce spending.
“When we have to make difficult choices, we will be thoughtful, transparent, and fair,” he said, highlighting the budget’s focus on cutting wasteful expenditures and improving efficiency.
Economists forecast Canada’s fiscal deficit for 2025/26 to reach between C$70 billion and C$100 billion, a sharp rise from the projected C$43 billion for the previous fiscal year and one of the largest deficits in decades.
Carney said the budget, scheduled for November 4, will support “unprecedented” investments in Canada over the next five years. He aims to balance the operating budget within three years and will include a climate strategy.
As his minority government must secure support from opposition members to pass the budget, Carney met with leaders from other parties, including main opposition leader Pierre Poilievre, who has called for caution on deficit spending.
“We won’t play games. We won’t waste time. And we won’t hold back. We will do what it takes,” Carney said.
