Canada Unveils 2026 Budget With C$45B Housing Plan, C$142B in New Spending and Wider Deficits

Canada released its 2026 federal budget on November 5, anchored by C$45 billion in housing affordability measures and a new C$25 billion Canada Growth Fund, while projecting higher borrowing and a modestly slower growth outlook. Total new spending over five years reaches C$142 billion, a scale that analysts say could prompt cautious adjustments from the Bank of Canada, which simultaneously renewed its monetary policy framework with the federal government, reaffirming price stability as its primary objective while retaining flexibility to respond to economic shocks.

The government projects a 2026/27 budget deficit of C$62.3 billion, with the 2027/28 shortfall seen at C$62.5 billion, slightly improved from the C$63.1 billion forecast in April. The federal debt-to-GDP ratio is expected to reach 39.9% in 2026/27, peak at 40.4% in 2028/29, and ease modestly to 40.1% by 2030/31. Public debt charges are projected at C$60.2 billion in 2026/27, with that figure rising from 1.8% of GDP to 2.2% by 2030/31.

To finance the wider deficit, Canada plans to borrow C$611 billion in 2027/28, up from C$587 billion in 2026/27, with 72% of total borrowing earmarked to refinance maturing debt. Bond issuance for 2027/28 is set at C$316 billion, alongside C$290 billion in Treasury bill issuance, and Treasury bill issuance will be increased by C$16 billion in the current fiscal year.

On growth, the budget cuts the 2026 GDP forecast to 1.0% from 1.1% and trims the 2027 outlook to 1.7% from 1.9%. Oil price assumptions underpin the fiscal projections, with WTI crude expected to average $87 per barrel in 2026 and $89 in 2027. Canada also confirmed it will maintain its permanent resident immigration target at 380,000 annually for the next three years, while the budget includes tax incentives for successful startups and a continued commitment to regular green bond issuance.