Good morning. We’re going all in on breaking down the budget today. Let’s dive in.
Up first
The big picture
Catch up: Prime Minister Mark Carney’s government unveiled a blueprint to counter rising U.S. protectionism and bolster a sluggish economy
Analysis: The budget followed through on cuts, but changes to address long-standing productivity problems were more incremental than transformational
For you: What about your wallet? Here are eight ways the budget affects your personal finances, from vacant homes to student loans
Prime Minister Mark Carney holds up a copy of the budget beside Finance Minister François-Philippe Champagne on Parliament Hill on Tuesday.Justin Tang/The Canadian Press
In focus
Blueprint for survival
U.S. President Donald Trump doesn’t appear by name in the 2025 federal budget, but he’s all over the 493-page document. Finance Minister François-Philippe Champagne presented Carney’s first budget to the House of Commons. Even the opening words – “The world is changing” – hint at a survival guide to Trump’s trade war. Future spending is largely aimed at boosting Canada’s economy, while also moving faster to address the everyday economic concerns of Canadians.
Here are five charts to guide you through the announcements. You can check out the full list of graphs and other takeaways from our economics team.
The deficit
Many of us were looking for one number in this document: $78.3-billion. The deficit will edge lower over the projection horizon, reaching $56.6-billion in 2029-30.
The budget also shows the latest evolution of the government’s fiscal anchors. Now there are two objectives: maintaining a declining deficit-to-GDP ratio and balancing operating costs with expenses by 2028-29. After factoring in $56-billion in savings from cuts to the public service and program spending, the total new spending rises to more than $140-billion.
Immigration
Canada will see a dramatic cut in the number of temporary residents admitted in the next three years, while stabilizing the number of permanent residents to 380,000 a year for three years, down from 395,000 in 2025. In a bold move that may draw a backlash from colleges and universities, Ottawa is to halve the number of international students who can come here.
The budget also includes measures to poach talented workers from abroad, including the United States. There is a plan for a swift pathway to Canada for holders of U.S. H-1B visas, meant for high-skilled jobs that American tech companies find hard to fill.
Public sector
Don’t expect mass layoffs. That’s not the plan.
The federal government will shrink the size of the public service by 40,000 people over five years. Some specific programs are listed for elimination. But most of the savings are described by departments as general efficiencies to be realized through staffing reductions – largely through a mix of attrition and some layoffs, plus early-retirement incentives for older government workers.
Investment
Investment is clearly the overarching theme of this year’s document. The budget is full of measures aimed at getting the corporate sector spending, and the government says it will be one of the big spenders. But the marginal accelerated deduction measures may fall short of the major tax overhaul Bay Street executives had hoped for.
The signature corporate tax change combines old and new incentives that let businesses write off the costs of new capital investments sooner, or in some cases right away. Those incentives are grouped together as a “productivity super-deduction.” The largest sectoral drop in tax rates from the immediate deductions measures will be in manufacturing and processing, but the incentives also cover clean energy, productivity and research investments.
Defence
Because of an “increasingly dangerous and divided world,” the Canadian government is boosting defence spending by $84-billion over five years and, separately, creating a $1-billion Arctic Infrastructure Fund. However, the government was unwilling to say how much closer it is to reaching its NATO commitment.
The budget also offered a glimpse at a new defence industrial base, and it’s heavy on emerging technologies. The largest of these investments is a $1-billion program under the Business Development Bank of Canada to support small to medium-sized businesses.
Keep reading
More stories
On health: A proposal allocates $5-billion over three years for a dedicated Health Infrastructure Fund.
On trucking: Ottawa pledges $77-million over four years to curb tax avoidance in a scheme known as “Driver Inc.”
On emergency management: A proposed new National Public Alerting System gets $55.4-million.
On climate change: The “climate competitiveness strategy” does little to answer the regulatory questions hovering over the energy sector.
On technology: Promises include improvements to the biggest innovation-spending program, funding quantum tech and legislation to support open banking and stablecoins.
Ideas
Opinion and analysis
Andrew Coyne writes: Every little bit helps, I suppose, but this is far from the sort of “transformative” measure expected, or required.
Shannon Proudfoot writes: Carney’s first budget was, in its surgical brusqueness, its own sort of branding exercise – a manifesto of no rather than yes.
Campbell Clark writes: What Champagne delivered isn’t the overwhelming fiscal firepower the Liberals have said is needed to transform the economy. It is more cautious.
Bookmarked
On our non-budget reading list
Shein in Paris: The e-commerce company’s first physical store debut triggers explosive backlash.
Saudi in Canada: Saudi Investment Minister eyes opportunities in Canada in fields such as food and mining.
Housing in stocks: Are REITs a good way for non-homeowners to tap into real estate gains?
Morning update
Global markets were unnerved as traders wrestled with a steep selloff and a surge in volatility to the highest levels in months.
Wall Street futures were mixed and TSX futures were steady after major North American markets closed sharply lower yesterday.
Overseas, the pan-European STOXX 600 was down 0.33 per cent in morning trading. Britain’s FTSE 100 declined 0.1 per cent, Germany’s DAX fell 0.6 per cent and France’s CAC 40 retreated 0.2 per cent.
In Asia, Japan’s Nikkei closed 2.5 per cent lower, while Hong Kong’s Hang Seng gave back 0.06 per cent.
The Canadian dollar traded at 70.76 U.S. cents.