Key Insights from Canada's Ambitious Federal Budget

Wed Nov 05 2025 06:09:13 GMT+0200 (Eastern European Standard Time)

Prime Minister Mark Carney reveals a transformative federal budget aimed at fortifying Canada's economy amidst significant global changes, proposing substantial investments while also warning of necessary sacrifices.

Canada's Finance Minister François-Philippe Champagne presents a federal budget that proposes significant spending, aimed at boosting the economy in response to global shifts. The budget warns of sacrifices but emphasizes investments in infrastructure, clean energy, and defense to make Canada more competitive internationally. Highlights include a projected record deficit, a new tax approach, and shifts in immigration policy, all marking a departure from previous administrations.

Canadian Prime Minister Mark Carney has introduced his first federal budget - a blueprint for how he plans to deliver on his promise to make Canada's economy the strongest in the G7.

The ambitious plan, seen as a key test of the new leader and former central banker, is as much a political document as a spending blueprint.

It warns that Canada is in an era of significant change not seen since the fall of the Berlin Wall, which is underscored by its rapidly shifting relationship with the US, once the country's closest ally.

Finance Minister François-Philippe Champagne told reporters in Ottawa that there's some headwinds on the horizon and that Canada needs a strong response.

Here are six takeaways from the spending plan:

'Sacrifices' v 'generational investments'

The budget includes billions of dollars in spending that could balloon Canada's deficit to C$78.3bn (£42.6bn) - the second biggest on record.

Carney and Finance Minister Champagne have defended the massive spending plan, which will total C$280bn, as an investment to help boost Canada's global competitiveness. They argue that a strategic injection of funds will attract C$1tn in investment back to Canada in the next five years.

However, Carney has also warned Canadians of necessary sacrifices in his plan to transform the economy, projecting C$60bn in total spending cuts in the next five years.

Federal ministries could see up to 15% cuts in the coming years, which are expected to account for more than C$44bn in savings.

From trade to Eurovision: a global shift

With about 70% of trade moving to the US, Canada is now looking to Europe and Asia due to insecurity from past tariff policies, aiming to double non-US exports over the next decade.

Carney's budget proposes millions in backing for businesses looking to develop new export markets alongside enticing cultural connections.

Making Canada a 'clean energy superpower'

Carney's plan includes supporting low-emission energy projects while maintaining Canada’s commitment to combat climate change. The budget promotes carbon capture and storage technologies along with enhanced methane regulations.

Sovereignty through defence - and space launch

The budget outlines C$81.8bn in defense spending over the next five years to bolster Canada’s military in the face of global tensions.

Undoing the Trudeau era

Carney's first act was to roll back several of former Prime Minister Trudeau's policies, including the consumer carbon tax, which faced significant political backlash.

Cushioning Canada from trade shocks

With a C$5bn plan to assist sectors impacted by tariffs imposed by the US, the budget incorporates a proposed Buy Canadian Policy to support local businesses.