CP NewsAlert: Federal budget forecasts $78B deficit as Liberals shift spending plan

OTTAWA – This year’s federal budget contains a deficit nearly twice the size forecast by the Liberals a year ago, as Prime Minister Mark Carney’s government prioritizes capital spending over programs and services.

The budget tabled Tuesday projects a $78-billion total deficit for this fiscal year, up from a projection of around $42 billion in Ottawa’s fall economic statement from late last year.

Ottawa says the effects of the Canada-U.S. trade war and uncertainty over future trade rules have weighed heavily on the Canadian economy, while creating risks to its outlook.

While the latest update comes in well above last year’s estimate, experts say it’s broadly in line with expectations.

TD senior economist Francis Fong calls it a “hard-nosed budget” compared with those of previous Liberal governments under former prime minister Justin Trudeau.

That’s because it focuses on a few key areas for spending such as competitiveness, trade, defence and housing, rather than a broader range of various initiatives.

This report by The Canadian Press was first published Nov. 4, 2025.