Carney Government to Deliver Second Federal Budget Focused on Growth, Defence, and Affordability
Prime Minister Mark Carney will table his second federal budget on Thursday, outlining plans for economic growth, defence spending, and deficit management. The budget marks the first under Carney's majority Liberal government and sets a target of attracting $1 trillion in foreign direct investment.
Prime Minister Mark Carney is set to deliver his second federal budget on Thursday, marking the first budget presented under his majority Liberal government. 
Finance Minister François-Philippe Champagne stated the budget will reveal how Canada intends to become "masters of our destiny" by investing in growth, businesses, and sovereignty. Champagne added that the fiscal plan will focus more on building up the Canadian economy than on the relationship with the U.S.
The Liberals have set an ambitious target of drawing in $1 trillion in foreign direct investment over the coming years. The budget may also include details on allowing individual investors to buy into the Canada Growth Fund, a Crown-controlled sovereign wealth fund, as well as information on a new West Coast pipeline with Alberta.
On the economic front, the Bank of Canada and the International Monetary Fund project roughly two per cent GDP growth next year. The OECD expects Canadian growth to be lower than the IMF projection but higher than all other G7 countries except the U.S. Despite swings caused by trade uncertainty, the unemployment rate is currently lower than it was a year ago.
Affordability remains a central issue. Average hourly wages rose about 2.3 per cent year-over-year as of September, falling short of the three per cent climb in consumer prices over the same period. Canadian food bank usage hit record highs this year. National average home sale prices are 22 per cent lower than the March 2022 peak, and rent has dropped about nine per cent from its May 2024 high. The budget will also reveal immigration targets for the coming two years.
Fiscal projections vary across institutions. The spring economic update pegged the deficit at $75 billion for the 2026-27 fiscal year, while the Parliamentary Budget Officer projects the deficit will be about $63 billion this year before rising to $70 billion in the next. These figures are expected to change due to energy revenue spikes and spending on tariff-hit industries. The government plans to balance the operational budget by 2027-28 and may privatize some major airport operations to generate cash.
Defence spending is another key component. Tens of billions of dollars have been poured into national defence over the last year and a half to meet the NATO benchmark of two per cent of GDP. NATO is now asking members to increase spending to five per cent of GDP—comprising 3.5 per cent in direct military expenditures and 1.5 per cent on defence infrastructure—by 2035. Following the recent NATO summit in Turkey, Carney pledged to provide a full accounting of defence spending decisions and fiscal tracks in the budget. 
Opposition leaders have outlined their demands ahead of the budget release. Conservative Leader Pierre Poilievre called for further tax relief on energy products and cuts to immigration levels, stating "everything's worse" after a year and a half of Carney. NDP Leader Avi Lewis called for a wealth tax, the construction of 50 government-run grocery stores, and increased health care investment.