The federal government released Budget 2026 on November 5, outlining its latest economic and fiscal plan.  Read below for the summary of the budget from the Canadian Chamber, with commentary from the Langley Chamber:

Budget 2026 continues the Carney government’s push to use the government balance sheet to “catalyze” nearly $1 trillion in investment and lift the Canadian economy out of its sluggish state. The budget commits almost all of the $158 billion improvement in its five-year fiscal outlook to big bets aimed at stimulating growth. The largest measure, worth $36 billion, is the Productivity Mega Deduction, previously announced at the Canada Investment Summit.

The budget offers a mix of capital-focused incentives and measures to improve affordability for Canadians and address Indigenous infrastructure gaps. After all, higher oil prices have added to the cost of living in Canada. One of the most significant commitments is the goal to end homelessness within a decade, with $11.2 billion over four years directed toward that effort amid slow housing construction. Other measures include extending temporary fuel excise tax relief and an additional payment through the Canada Groceries and Essentials Benefit.

The federal government also continues to get leaner through efforts to innovate and streamline operations. It remains on track to reduce federal public-service headcount by 40,000 from its peak.

Capitalizing the budget

Budget 2026 presents an improved fiscal outlook and modestly stronger growth over the medium term. As higher oil prices feed through the economy, higher nominal GDP boosts government revenues.

Since the Spring Economic Update (SEU), stronger revenues and lower projected expenses have created approximately $158 billion in fiscal room over the next five years.  Separately, the preliminary deficit for 2025–26 came in at $39.3 billion, compared with the $66.9 billion expected in the SEU. Beyond 2025–26, deficits remain broadly similar to the spring outlook, averaging about $58 billion annually.

Program spending growth is expected to moderate after the initial increase in 2026–27, but new spending and tax measures since the spring still total approximately $152 billion. The improved fiscal outlook also includes a substantial downward revision to expected program expenses, rather than an equivalent reduction in approved funding.

The two primary risks to the budget outlook are lower-than-anticipated revenues from slower nominal GDP growth and higher borrowing costs from rising long-term interest rates. Nominal GDP reflects both real economic activity and prices. As the chart below shows, prices are doing most of the work in the first two years, with real GDP becoming the main driver later in the forecast. This is a reasonable assumption about the composition of growth given the current economic context. But reaching sustained annual real GDP growth of around 2% will be challenging and require stronger investment and productivity. The oil-price assumptions leave some room for upside, while the real growth outlook is more ambitious.

Public debt charges are among the fastest-growing expenses in the budget, rising by nearly 10% annually from $53.5 billion in 2025–26 to $85.5 billion by 2030–31. Federal debt is projected to reach nearly $1.6 trillion by the end of that period. With almost 14 cents of every revenue dollar going toward interest, the government will have less room for other priorities unless revenues strengthen or spending growth slows further. The broader interest-rate environment matters here, particularly higher long-term bond yields.

Overall, the government projects that it will meet its two fiscal anchors: balancing the operating budget by 2028–29, now expected a year early, and reducing the deficit-to-GDP ratio over the forecast horizon. We have argued previously that a declining debt-to-GDP anchor should be reinstated. But depending on how you slice the indicators, they can paint different pictures. The distinction comes down to assets.

Federal debt subtracts both financial and non-financial assets from liabilities, while net debt subtracts only financial assets. This federal net debt measure is also separate from the broader comparisons in the budget that include provincial and other government balance sheets. Non-financial assets include tangible capital assets, inventories and prepaid expenses. They are set to more than double over five years and account for a larger share of the government’s asset mix. As Ottawa supports capital formation through programs, transfers and direct procurement, evaluating those commitments against reasonable timelines and objectives will become increasingly important.

Combined federal financial and non-financial assets are projected to approach 40% of nominal GDP by 2030–31. That is a substantial balance sheet to manage, with greater responsibility to demonstrate value for Canadians.

The fine print

The Carney government’s second budget is more grounded in competitiveness and is defensible despite its high price tag. The outlook may be uncertain, but one thing is clear: government will play a larger role in steering the business community toward investment. Defence spending will open procurement opportunities, while agencies, Crown corporations and public investment funds will help shape economic growth. Like Budget 2025, this ambition will ultimately be judged by whether execution can match intent.

Broad-based tax reform was missing, but the Productivity Mega Deduction and Canada Growth Incentive should encourage more investment in Canada. The question is what type of investment, and how much additional productive capacity it will create. Regulations, approval delays and weak business dynamism also matter.

Nonetheless, this is a significant shift. Moving the Canada Strong Fund forward could help finance high-potential projects and companies. Plans to establish it as a separate Crown corporation provide more clarity on its direction. Its return expectations and risk profile, however, remain important questions. Making funding available does not necessarily mean the opportunities and conditions to invest will follow.

Budget 2026 also provides more detail on the path toward NATO’s commitments of 3.5% of GDP for core defence and 1.5% for broader defence and security. The budget projects combined spending of 4.1% of GDP beginning in 2027–28. Funding that year reaches $141.2 billion on a cash basis, including $89 billion for core defence and $52.2 billion for defence- and security-related spending. In our recent defence research, we note that the opportunity for businesses will depend on deliberate spending choices and a focus on sovereignty. As of latest data, only 18% of current defence sales are to Canadian-controlled companies. The annual spending outlined in the budget exceeds our projections in both dollar terms and as a share of GDP.

So, a year after the Carney government’s first budget, it is much the same playbook, but on a larger scale. U.S. tariffs have scarred certain industrial sectors, while uncertainty has weighed heavily on business confidence. The budget doubles down on domestic capacity through a substantial expansion of the government’s investment role. Some measures will take a decade to fully evaluate. Getting them started early in the government’s tenure makes sense while fiscal room is available, although committing most of that room leaves less flexibility if conditions worsen.

The government has built its credibility on ambition and a focus on the economy. The improved fiscal outlook gave it options, including room to address affordability at a difficult time. But the outlook remains uncertain. If tougher fiscal choices become necessary, it is not yet clear which commitments would be the first to go. Budget 2026 offers an opportunity for a meaningful shift in Canada’s economic performance. Ultimately, that will depend on whether government, businesses and Canadians can turn the ambition into results.

Commentary:

“This is a step change in how the government is incentivizing the kind of business investment and reinvestment Canada needs.   We welcome the Productivity Mega Deduction, expanded SR&ED support, the Canada Growth Incentive, and commitments to simplifying the tax system for individuals and business owners. In the Budget, the government acknowledges the tax system is not working for business. On behalf of our members, especially SMEs who are buried in the daily complexity of Canada’s tax system, the Canadian Chamber will work tirelessly to improve the system. This can’t just be a reform of user experience.  The other half of the equation is fiscal discipline. We are concerned that public debt charges are the fastest growing component of federal spending, and over time this will seriously limit what capacity the government has for services and new initiatives. With a projected $62.3-billion deficit and increasing borrowing costs, Ottawa must remain committed to its economic growth strategy as a way to mitigate this risk. If we can’t, this will become a fiscal shackle.   The real report card for this budget will come from boardrooms, factory floors and small businesses deciding that Canada is worth their next investment. Based on what we’ve seen, this Budget sets the stage for entrepreneurs and business owners to consider starting or growing their business here at home.” 

- Matthew Holmes, Executive Vice President, International and Chief of Public Policy, Canadian Chamber of Commerce


“Budget 2026 gets several things right for business, particularly its focus on productivity, investment, infrastructure and trade. Measures that make it easier for businesses to invest in new equipment and technology, strengthen our trade corridors and infrastructure, and help Canadian companies diversify into new markets are all important for long-term growth.  For Langley, investments in the Pacific trade gateway, agriculture and food processing, workforce development and housing-enabling infrastructure are particularly important. At the same time, businesses are still dealing with high costs and uncertainty, so implementation will matter. Businesses need these commitments to translate into faster approvals, better infrastructure and programs they can actually access.  The size of ongoing federal deficits also deserves attention, along with the soaring interest costs of carrying our debt.  Government investments are welcome, but we must continue demonstrating fiscal discipline and ensuring those investments deliver measurable economic returns and aren't just added to the debt. 
Overall, this budget represents a welcome shift toward improving the conditions for private-sector investment and growth. The next test is whether that ambition translates into actual improvements for businesses on the ground.”   

-  Cory Redekop, CEO, Greater Langley Chamber of Commerce