Finance Minister François-Philippe Champagne’s spring economic update finds the Liberal government sitting in a better-than-expected position — driven by a resilient economy and surging oil prices — which it’s using to justify billions in new spending to train up tens of thousands of skilled workers.
But the update into the government’s finances, tabled in the House of Commons on Tuesday afternoon, warns that Canada’s economy is not immune to complex forces including persistent tariffs and uncertainty caused by the U.S. and Israel-Iran war.
“The economy is expected to continue growing, but the outlook is subject to heightened global uncertainty, including ongoing trade tensions and geopolitical risks,” said the document.
The federal government typically presents updates between its annual budgets to revise its fiscal projections and sprinkle in new spending initiatives.
Sahir Khan, executive vice-president of the University of Ottawa’s Institute of Fiscal Studies and Democracy said that while the global picture means a “tepid forecast going forward,” Ottawa is sitting on a $60-billion windfall in part due to surging oil prices, giving Champagne a “revenue pop that the government’s been able to spend.”
“The government took the opportunity to stabilize the narrative around deficits … and then address some of the affordability measures that Canadians find particularly important,” he said.
Champagne’s Nov. 4 budget projected a deficit of $78.3 billion for the 2025-26 fiscal year, a more than $65-billion deficit for the current fiscal calendar, then gradually falling to $57 billion in 2029-30.
The April update puts the 2025-26 deficit at $66.9 billion — $11.5 billion lower than the November figure. The deficit is expected to decline to around $53 billion by 2030-31.
The update comes on the one-year anniversary of Prime Minister Mark Carney forming government. One of his key promises since then has been to slim operating costs, meaning day-to-day government expenses, while increasing spending on defence, major infrastructure projects and housing as part of his government’s push to reduce reliance on the United States.
The update puts the promise to balance the operating budget by 2028-2029 on track.
The cost of servicing the federal government’s debt remains one of the federal government’s largest line items and is still projected to spike in the years ahead. The government says it cost $54 billion in the 2025-26 fiscal year and is projected to rise to more than $80 billion by 2030-31. Those estimates are largely in line with those in the fall budget.
“Over the past year, Canadians have navigated a rapidly changing and increasingly fragmented world. One that is more complex, more volatile and, for many, more costly and unpredictable,” said the budget preamble .
“We are concentrating on what we can control: maintaining fiscal sustainability while making targeted, high-impact investments for Canadians.”
Khan said the update includes “slack,” or conservative forecasting.
“I think there’s slack around oil prices, there’s slack in terms of the type of the level of revenue the government is getting from the economy,” he said.
That could mean a bigger spend is coming in the fall budget, or room to recover if the global economic picture further crumbles.
“Any government is going to have to keep their powder dry,” Khan said.
Unlike other updates which have been akin to “mini budgets,” Tuesday’s document is relatively slim at 167 pages and “more of a waypoint on the way to the budget,” said Khan.
But it does includes billions in new spending.
The government is using some of the available fiscal room for increased spending of $54.5 billion over six years. That includes $37.5 billion for new measures such as the previously announced groceries and essentials benefit, and a temporary suspension of the federal fuel excise tax.
One of the flagship measures of the update is a plan to address Canada’s “urgent” need for trades workers to fulfil the government’s promise to build more homes and major projects.
“If nothing changes, Canada will face a persistent gap of more than 20,000 skilled trades workers per year,” notes the document.
It pledges $6 billion to address that gap, with one-third of that dedicated to recruiting, training and hiring 80,000 to 100,000 new skilled trade workers by 2030-31.
“We are slowing down on immigration, and the real risk is that we don’t match skills and the needs of the economy,” said Khan.
Dubbed the Team Canada Strong program the plan includes a redesigned apprenticeship grant that will provide apprentices an income support top-up of $400 per week while they are attending mandatory in-class technical training, for a total payment of up to $16,000 per apprentice, paid in addition to Employment Insurance.
It would also provide up to $10,000 per apprentice to support employers, particularly small and medium-size businesses, to hire, train and retain apprentices, including help matching workers to jobs.
The initiative would also see Canadian Armed Forces train in the skilled trades with hands-on training offered through Cadets and Junior Canadian Rangers, and fully funded trades training for young Canadians joining the Canadian Armed Forces primary Reserve.
The fiscal update also folds in the sovereign wealth fund, which Carney announced Monday.
The government is pitching the investment vehicle, which will begin with an initial endowment of $25 billion, as a way for Canadians to benefit from major projects.
Carney said Canadians will have the opportunity to invest in the fund and share in the financial returns generated by the projects, suggesting it would be similar to purchasing a government bond.
The update says Ottawa will set up a Canada Strong Fund transition office, which will provide more details going forward.
“I’m really hopeful that there’s more clarity around the problem it’s trying to solve,” said Khan.
The fiscal document builds on some of Ottawa’s recent affordability announcements around groceries and gas prices, with a promise to look at cellphone and internet bills.
The update says the government intends to launch a “whole-of-government competition plan” aimed at bringing down mobile and internet plan costs, but it’s light on details.
The competition would focus “on removing inefficient government policies that impede competition arising from regulation, procurement, and industrial support,” with more details to come.
It promises a break for Canadian workers and employers on Canada Pension Plan contributions. The government is promising as of Jan. 1, 2027, the base contribution rate will drop to 9.5 per cent, from 9.9 per cent.
The update says that would translate into annual savings of about $133 for an employee earning $70,000 a year, plus savings for the employer.
“I think the absence of anything focused on long-term capital spending tells you that this was largely an affordability budget,” said Khan. “It’s meant to deal with the anxiety of Canadians at the household level.”
Carney has also been previewing a “playground to podium” strategy for Canadians sports.
The spring economic update pledges $755 million to expand access to sport and make better use of existing and new infrastructure “to support Canada’s world class athletes who inspire pride and unity, as we celebrate their accomplishments as a nation.”
It also promises to stand up the Financial Crimes Agency, which promises to be the country’s “first-ever federal law enforcement agency dedicated to investigating serious and complex financial crimes and recovering the proceeds of crime.”
With Carney’s government in majority territory, the budget bill is expected to pass without issue.
But Khan said the prime minister faces pressure outside of the House..
“I think the government will be judged on the delivery, not just on the narrative,” he said. “The economy doesn’t respond to announcements and budget allocations, it responds to shovels in the ground.”
