OTTAWA \u2014 OTTAWA — The parliamentary budget officer said Thursday he expects the coming fall budget will reveal a sharp increase in Ottawa\u2019s deficit that puts the government\u2019s previous fiscal anchors in jeopardy.<\/p>\n
Ottawa\u2019s fiscal watchdog Jason Jacques now projects the federal government will post an annual deficit of $68.5 billion this year, up from $51.7 billion last year.<\/p>\n
He said in a new report that he expects the federal debt-to-GDP is no longer on a declining path over the medium term — a ratio that previously was a key fiscal anchor for the federal government.<\/p>\n
The office\u2019s updated fiscal and economic outlook offers parliamentarians a baseline estimate of the state of federal finances heading into the Liberals\u2019 fall budget on Nov. 4.<\/p>\n
The PBO\u2019s update does not include plans to incrementally ramp up defence spending to meet the updated NATO benchmark of five per cent of GDP by 2035. It also doesn\u2019t factor in Ottawa\u2019s announced plans to reduce public service spending over the next three years.<\/p>\n
But the report does account for some $115.1 billion in net new spending over five years announced by the government since the last fiscal update in December of last year.<\/p>\n
The office said an economy weakened by Canada\u2019s trade war with the United States is dragging down Ottawa\u2019s tax revenue and pushing deficits higher as the Liberals boost capital spending.<\/p>\n
The PBO predicts real GDP growth of 1.2 per cent in 2025 and 1.3 per cent in 2026, down from 1.7 per cent and 1.5 per cent, respectively, in the office\u2019s March outlook.<\/p>\n
Nominal GDP, a measure of the federal government\u2019s tax base, is projected to be $12.9 billion lower on average from 2025 to 2029, due to the lasting effect of tariffs.<\/p>\n
The PBO says that with lower revenues and higher government spending, budget deficits will be $26.6 billion higher each year on average through to 2029-30 than the projections in its March outlook.<\/p>\n
The PBO expects deficits to decline slightly but to remain close to $60 billion annually over the forecast horizon.<\/p>\n
Finance Minister Francois-Philippe Champagne on Thursday blamed the higher deficit on the global trade disruption.<\/p>\n
\u201cWith everything that\u2019s happened in the world, when you look at the deficit of Canada, a large part of that is in response to what has happened,\u201d he told reporters on his way into a cabinet meeting.<\/p>\n
Champagne said Canadians expect the government to support workers and shift the economy for future growth.<\/p>\n
He said after cabinet that Canada continues to have a strong fiscal position among its G7 counterparts and defended the need for \u201conce-in-a-generation\u201d investments to meet the economic moment.<\/p>\n
\u201cThe parliamentary budget officer can have his own view,\u201d Champagne said.<\/p>\n
\u201cMy role is to ensure the long-term fiscal stability of Canada and make sure the investments are there to support the Canadian economy for generations to come.\u201d<\/p>\n
Jacques has expressed doubts about whether Ottawa still has its \u201cfiscal anchors\u201d — benchmark metrics that show the federal government is responsibly managing its debt.<\/p>\n
Prime Minister Mark Carney has insisted the federal government does still have fiscal anchors.<\/p>\n
Champagne said Thursday the Liberals\u2019 election promises to maintain a declining deficit-to-GDP ratio and balance the operating budget in three years account for the government\u2019s fiscal anchors.<\/p>\n
The PBO report shows that, after a expanding to -2.2 per cent this fiscal year from -1.7 per cent last year, the deficit as a share of GDP is expected to shrink through to 2029-30.<\/p>\n
Projections for deficit-to-GDP in the PBO\u2019s outlook are generally larger each year than those in the spring Liberal platform, which predicted a ratio of -1.96 per cent this year.<\/p>\n
The former Liberal government under prime minister Justin Trudeau used a declining debt-to-GDP ratio and a cap on the deficit of one per cent of GDP as fiscal anchors.<\/p>\n
The PBO says total debt as a share of GDP is no longer on a downward path and will rise to 43 per cent over the medium term from 41.7 per cent last year, as deficits routinely top one per cent of GDP.<\/p>\n
Jacques was named parliamentary budget officer on a six-month interim basis earlier this month, before the House of Commons began its fall sitting.<\/p>\n
A permanent appointment must be approved by the House, and the Conservative party has pushed to keep Jacques in the role.<\/p>\n
Jacques was scheduled to appear at the Commons committee on government operations and estimates Thursday to answer MPs\u2019 questions.<\/p>\n
This report by The Canadian Press was first published Sept. 24, 2025.<\/p>\n
By Craig Lord<\/p>\n","protected":false},"excerpt":{"rendered":"OTTAWA \u2014 OTTAWA — The parliamentary budget officer said Thursday he expects the coming fall budget will reveal…\n","protected":false},"author":2,"featured_media":168804,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[45,49,48,46,47,44,714],"class_list":{"0":"post-168803","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-canada","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-economy","12":"tag-national","13":"tag-news","14":"tag-politics"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/168803","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=168803"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/168803\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/168804"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=168803"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=168803"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=168803"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}