In a stark alert ahead of the federal fall budget, Interim Parliamentary Budget Officer Jason Jacques forecasted Thursday that Canada's deficit will balloon to $68.5 billion for 2025-26, a sharp rise from $51.7 billion the previous year, driven by U.S. trade tariffs and increased capital spending.
The projection, detailed in the PBO's updated economic outlook, signals the end of declining debt-to-GDP ratios—a key fiscal anchor—for the first time in 30 years. "Stupefying," "shocking," and "unsustainable"—those were just some of the words Jacques used to describe the trajectory during a parliamentary committee appearance.
Addressing MPs on the government operations and estimates committee, he urged action.
"I think everybody should be concerned. We’re hoping, and certainly expecting, the government as part of Budget 2025 to clearly indicate what the government plans to do to address … this problem, because it’s certainly not sustainable."
The report anticipates sluggish GDP growth of 1.2% in 2025 and 1.3% in 2026, down from earlier estimates, with deficits averaging $60 billion annually through 2029-30.
"Budget watchdog releases damning report on Carney's ballooning deficit," said Conservative Party of Canada Leader Pierre Poilievre. "Deficit soaring 62% higher than the one Trudeau left behind. $314 billion in inflationary deficit spending over the next 5 years—double what Trudeau planned. The numbers prove it: Carney costs more than Trudeau and you pay the price."
Finance Minister François-Philippe Champagne defended the path, emphasizing long-term stability amid economic pressures.
"Carney has doubled the deficit, given Canada the fastest-shrinking G7 economy, and delayed the budget until the fiscal year is almost over—proof that the fiscal watchdog needs job security to tell Canadians the truth about the Liberal mess we are in," said Poilievre recently.
Appointed to a six-month interim role on September 2, Jacques, a veteran public servant, called for clearer fiscal guardrails as the November 4 budget looms. Conservatives have pushed for his permanent appointment.
"Budget watchdog releases damning report on Carney's ballooning deficit," said Conservative Party of Canada Leader Pierre Poilievre. "Deficit soaring 62% higher than the one Trudeau left behind. $314 billion in inflationary deficit spending over the next 5 years—double what Trudeau planned. The numbers prove it: Carney costs more than Trudeau and you pay the price."
Finance Minister François-Philippe Champagne defended the path, emphasizing long-term stability amid economic pressures.
"Carney has doubled the deficit, given Canada the fastest-shrinking G7 economy, and delayed the budget until the fiscal year is almost over—proof that the fiscal watchdog needs job security to tell Canadians the truth about the Liberal mess we are in," said Poilievre recently.
Appointed to a six-month interim role on September 2, Jacques, a veteran public servant, called for clearer fiscal guardrails as the November 4 budget looms. Conservatives have pushed for his permanent appointment.