The federal government presented its Spring Economic Update this week, which outlines the current state of the country’s finances, and showed improved economic conditions and fiscal numbers, but which was mostly spent on new programs and initiatives.  

Fiscal Outlook:

Since Budget 2025, the federal government’s fiscal outlook has improved, with stronger economic performance creating approximately $60.3 billion in additional fiscal room over five years (2026–2030), or about $10.7 billion annually. This improvement is driven by higher nominal GDP growth, stronger oil prices, and increased tariff-related revenues, including an estimated $10.1 billion in import duties in 2026, reflecting countermeasures on U.S. goods and surtaxes on imports from China.

The Spring Economic Update allocates most of this additional fiscal room to new spending. It introduces $37.5 billion in new measures over six years, including $17 billion added since Budget 2025, bringing total net new spending announcements to $54.5 billion.

As a result, the federal deficit is projected to improve modestly in the near term. The 2025–26 deficit is now forecast at $67 billion (2.1% of GDP), down from $78.3 billion in Budget 2025, representing an improvement of approximately $11.5 billion. Deficits are expected to decline gradually to $53 billion by 2030–31, though the overall pace of improvement remains limited.

From a business perspective, the government's chosen an approach where improved revenues are largely being reinvested into new programs and spending, rather than used to accelerate deficit reduction.

Some Key Takeaways:

CPP Contribution Reduction
The government will reduce the base CPP contribution rate, effective January 1, 2027, lowering payroll costs for employers and employees.   The Chamber applauds this direct, structural cost reduction. Savings per employee are modest, but this is one of the few broad-based cost relief measures for businesses.  The reduction means that for each employee earning $70,000 a year, the employer would save $133, with smaller savings on salaries less than that.

Skilled Trades
The government is launching a national initiative to recruit and train 80,000–100,000 skilled trades workers by 2030, supported by:
- Up to $10,000 per apprentice in wage subsidies for employers
- $400/week income top-up for apprentices in training
- $5000 completion bonus for apprentices who get certified in a Red Seal trade
 
Temporary Fuel Tax Relief
As previously announced, the federal fuel excise tax has been suspended from April to September 2026, lowering gasoline and diesel costs by 10 cents per litre for gas and 4 cents for diesel.

Build Communities Strong Fund
A $51 billion, 10-year infrastructure program (starting 2026–27) will fund roads, transit, water systems, and community infrastructure.  This could mean improvements to transportation and growth infrastructure, but local impact will depend on provincial allocation and municipal access. The federal funding is tied to conditions such as provincial cost-matching and actions to reduce development costs (e.g., development charges) to support housing supply

Trade Infrastructure & Diversification Strategy
The federal government is advancing a coordinated approach to strengthen Canada’s trade capacity through a $6 billion Trade Infrastructure Strategy, alongside broader efforts to expand trade agreements and diversify export markets beyond the United States. This includes investments in trade corridors, supply chain infrastructure, and transportation systems, as well as continued pursuit of new and expanded trade partnerships globally.

A Sovereign Wealth Fund
The government is proposing creating the Canada Strong Fund, a sovereign wealth fund of sorts, and seeding it with $25 billion.  The fund will then invest in strategic Canadian projects and companies alongside other investors—with a clear objective to achieve commercial returns.

Details are sparse, but this will not be funded through operating surpluses – there are none – but the government is suggesting it may “unlock” federal assets (perhaps sell or privatize) to generate income for the fund. Institutional and retail investors will also be given an opportunity to invest and participate as well.
 
More information:

Visit the Government of Canada's Spring Economic Update page >