Spring Economic Update

What You Need to Know.

April 28, 2026

Scene Setter

In the 365 days since his government’s election in 2025, Canadians have grown decidedly more comfortable with Mark Carney as prime minister, with both his personal and the government’s approval ratings improving.

Fresh off securing a majority government, Carney now has a three-year runway with considerably fewer parliamentary hurdles. Today’s economic update gave Canadians their first signal as to how Carney intends to balance urgency with a bigger-picture focus.

The rise in oil prices and upward revisions to economic growth provided the government with substantial new revenues to work with. They opted to use the windfall to fund a sovereign wealth fund and make major investments in training for the skilled trades.

While this keeps the government on track with its fiscal anchors – a declining deficit-to-GDP ratio and balancing the operating expenses budget by 2028/29 – there was no mention of future commitments, like Canada’s plan to spend 3.5% of GDP on defence by 2035.

Overall, with the political wind at his back, Carney didn’t need a home run today. He needed to land a sure-footed, “steady-as-she-goes” interim update that avoided unforced errors. He also had to set the table for the political drama that lie ahead in 2026, including the July 1st CUSMA review date. Initial reviews of this afternoon’s economic update suggest that this circumspect mission was accomplished.

Analysis

— CARNEY COURTS EVERYDAY INVESTORS: Carney teased out a major plank of today’s statement on Monday, announcing the Canada Strong Fund, which he billed as a Sovereign Wealth Fund that would launch with a $25B investment from the feds. The plan was fleshed out today, including a route for retail investors to partake and a planned return for taxpayers.

Michael Ingoldsby, Senior Consultant: Early responses to the Canada Strong Fund have focused on how its mandate will fit alongside the proliferating suite of agencies and institutions intended to unlock investments across Canada. Those questions are fair and the announced review of existing institutions should help address that concern. In the meantime, like the Victory bonds during WWII, the Fund will provide an opportunity for Canadians to support their country during what is an unsettling time. That is a genuine positive for the country. Expect Canadians to surprise the cynics with how much they step up and contribute.

— LESS DEFICIT, MORE SPENDING: The Spring Economic Update posts a slightly better-than-projected deficit for 2025-2026. It is now $11.5B lower than expected. Future deficits, however, remain on par with previous budgets due to newly announced spending.

Robin MacLachlan, President: An ambitious agenda to expedite major project development requires an equally ambitious plan to build the skilled workforce to do the work. A signature piece of today’s update is the major investment in the skilled trades. The apprenticeship training grant and completion bonus provide incentives to workers who must put down tools and put a pause on pay-cheques to upgrade their skills in the classroom. Combined with a boost to the Labour Mobility Tax Credit the Carney government is betting big on the skilled trades.

— LIBERALS LEVEL SET CUSMA: In an interview with CBC that aired earlier this week, Carney said tariffs on key industries like steel and automotive violated the existing free trade agreement. He also made it clear that he won’t be ‘chasing a small deal’ to get U.S. tariff relief.

Bryce McRae, Senior Consultant: With an unpredictable negotiating partner in Washington and U.S. congressional midterm elections on the horizon, Prime Minister Carney is no longer projecting short-term optimism on a sweeping CUSMA reset. He is placing the blame squarely on U.S. tariffs, while doubling down on industry support and diversification in the spring update. This level set buys time but the government must watch public support closely in case it slips if no CUSMA deal or sectoral tariff relief materializes.

— AFFORDABILITY ON OFFER? The government announced it would reduce fuel prices at the pump in an announcement ahead of today’s release, but the update didn’t go much further on ‘new’ affordability measures.

Christine Burke, Vice President & Digital Lead: Affordability remains the issue on Canadians’ minds. By teasing “good news” before the update, the Prime Minister raised expectations for meaningful relief. With recent national polling showing Canadians believe the government has fallen short on affordability, today was a chance to deliver. Instead, the update offered little that will tangibly lower the cost of living for households already feeling squeezed.

— OPPOSITION REACTION: Opposition reaction is perhaps less consequential for this government now that it has a majority. It does show, however, how the Conservatives intend to adapt their strategy to play a longer game. It also previews at how NDP Leader Avi Lewis plans to carve out his space on the left.

Josie Sabatino, Vice President: Conservative Leader Pierre Poilievre set the stage for today’s Spring Economic Update on Sunday, when he called for an end to the federal government’s “credit card budgeting.” Expect the Official Opposition to continue to pressure the Carney government to commit to a plan to balance the budget in the medium term. They will likely focus on spending reductions on specific initiatives, including the gun buy-back program, foreign aid, and corporate subsidies.

Bryce McRae, Senior Consultant: With a majority government now in place, the Conservatives no longer need to worry about inadvertently triggering an election. This will result in a shift in the opposition’s dynamics and strategy. A fiscal hawk by nature, Poilievre now has room to be sharper and more sustained in pressing the deficit case. This update, which Conservatives see as a deficit document dressed in nation-building language, gives Poilievre plenty to work with.

Claire Smith, Senior Consultant: Avi Lewis may not have a seat in the House, but that didn’t stop him from weighing in on the Spring Economic Update. Lewis centred his criticism around the cost-of-living crisis, the failure to expand pharmacare, and the government’s refusal to raise taxes on Canada’s wealthiest individuals and corporations. In sum, New Democrats accused Carney of subsidizing the private sector with public funds, rather than supporting the public interest.

— AI RISKS AND REWARDS: The government did not provide clarity on the timeline for release of the expected AI strategy, but said it would be structured around six general pillars that Minister of AI Evan Solomon unveiled in a recent speech.

Claire Smith, Senior Consultant: Last spring, PM Carney’s government inaugurated its mandate by heralding AI’s transformative potential for Canadians’ careers. A year later, the Spring Economic Update reflects a more balanced tone. It’s no coincidence that the very first pillar focuses entirely on protecting Canadians and safeguarding our democracy.

What Caught Our Eye

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Strategic Roadmap

Ways and Means Motion

Certain proposals in the Spring Economic Update may require a ways and means motion. Such motions can lead to confidence votes, which Carney’s new majority won’t have a problem passing.

Budget Implementation Act II

Today’s update included legislative proposals. That means a new bill or bills to implement changes. In past years, the government has introduced a second omnibus budget implementation act, following the Fall Economic Statement. We’ll see if the government follows suit with its spring update.

Pre-Budget Consultations

The finance committee is accepting pre-budget submissions until May 22nd in advance of Budget 2026, expected this fall. Committee submissions are generally made public. The committee has yet to hold witness hearings to engage and question stakeholders directly.

Finance Canada

The department will conduct its own pre-budget consultations where stakeholders would be invited to make submissions directly.

Fall Budget

The fall budget will be the next high-level check-in on Canada’s fiscal status. Will Carney’s team wait until after the U.S. midterms?

By the Numbers

Revised Deficit

2025 – 2026

$66.9B

Down from $78.3B projected in Budget 2025

Projected Deficit

2026 – 2027

$65.3B

Down from $65.4B in Budget 2025

New Spending

$54.5B

over six years

Net Debt-to-GDP Ratio

2026 – 2027

40.7%

Highlights

Chapter One—Building Canada: All for Canada

1.1 Delivering for Canadians

$25B over three years to seed the Canada Strong Fund, to invest in projects and companies driving Canada’s economic transformation
Make permanent the Employee Ownership Trust (EOT) tax exemption
Launch an investment summit in September
Introduce legislation to obtain the information necessary for a comprehensive evaluation of airport reforms
Engage a neutral third-party dispute-resolution organization to clear the backlog of air travel complaints
Create a simpler and more effective regulatory regime so that air passengers are fairly compensated when travel is disrupted

1.2 Building to Grow

Prioritize income tax rulings related to large nation-building projects and investments that enhance productivity and strengthen critical sectors of Canada’s economy
Make enhanced oil recovery an eligible use for the Carbon Capture, Utilization, and Storage tax credit
$51B over 10 years and $3B ongoing for the Build Communities Strong Fund
Launch the National AI Strategy to create AI that is safe and sovereign, drive AI adoption, create new economic opportunities, strengthen public services, and improve Canadians’ quality of life
Make permanent the Employee Ownership Trust Tax Exemption

1.3 Supporting Strategic Sector Initiatives

Leverage new and existing trade agreements to support new investment, diversify Canada’s auto export markets, and position Canada as a global leader in electric vehicles
Launch a new small and medium business procurement program to make it easier for Canadian firms to win federal contracts

1.4 Expanding Trade at Home and Abroad

No new policy or spending measures

1.5 Clean Growth and Conservation

$3B over five years to Environment and Climate Change Canada to provide climate-related support to vulnerable countries
$2B for FinDev Canada, as well as $732M over three years, beginning 2028-29 to expand FinDev Canada’s concessional finance facility
Support the Canadian Climate Institute to host a Sustainable Finance conference in the coming year
$160.8M over five years with $3M in amortization to Fisheries and Oceans Canada and Transport Canada to continue protecting Canada’s whales and their habitat across all coasts
$91.3M over five years, with $3.7M in amortisation to implement a regional noise monitoring and management program and to address other threats to the endangered Southern Resident Killer Whale population

1.6 Defending Our Sovereignty

$103.8M over five years and $22.3M ongoing to establish and operate the Defence Investment Agency (DIA) as a stand-alone entity
Propose legislative amendments to the Defence Production Act to provide the DIA with expanded authorities and will name a new minister
$2B over three years to support Operation UNIFIER, training Ukrainian forces

1.7 Driving Productivity and Affordability Through Competition

Launch a whole-of-government competition plan to ensure that competition is prioritised throughout the federal government’s policies
Engage with federally regulated financial institutions to better understand stablecoins and other tokenized assets
Post regulations this spring allowing federally regulated financial institutions to make a broader range of investments to improve financial services
Amend the Bank Act to ensure the review for national security risks of investments in Canadian businesses by foreign banks and their affiliates is consistent with how other foreign investments in Canada are assessed

Chapter Two—Benefitting Canadians: A Canada for All

2.1 Supporting Workers and Young People

$2B over five years and $262M ongoing to increase the number of young people in the skilled trades
Creation of the Team Canada Strong Program to provide youth aged 15-30 with paid, entry-level, trades-related work experience that leads into apprenticeship
Creation of the Build Canada Apprenticeship Service to help employers to hire, train, and retain apprentices
$331M over five years with $18M ongoing to modernize and boost Red Seal apprenticeship training, while expanding Union and employer led training pathways
Investment for the Red Seal Program Modernisation to reduce certification delays, and improve national consistency
Expand the Union Training and Innovation Program (UTIP), enabling union-run training centres to upgrade facilities, expand capacity, and invest in modern equipment
$3.4B over five years with $468M ongoing to address the challenges that can stop apprentices from completing their training and moving into permanent jobs
$250M over five years and $45M ongoing to expand Canada’s skilled trades training capacity through the Canadian Armed Forces (CAF), and expand pathways for skilled trades in the forces
$356.2M over five years to extend the supplementary Employment Insurance benefits in 13 regions
Increase in the annual limit on expenses that can be deducted under the Labour Mobility Deduction for Tradespeople from $4,000 to $10,000
Intend to reduce the contribution rate in the base Canada Pension Plan from 9.9 per cent to 9.5 per cent through legislative amendments, effective January 1, 2027

2.2 Bringing Down the Costs of Groceries and Essentials

Intend to amend the Canadian Food Inspection Agency Act and the Pest Control Products Act to include consideration of food security and cost of food
$24M over four years, beginning 2027-28, and $9M ongoing to enable Health Canada to expand economic analysis capacity and to optimise the review processes for pest control products

2.3 Making it Easier to Afford a Home

$41.9M over five years to the National Research Council, the Standards Council of Canada, and Innovation, Science and Economic Development Canada to update model codes, mobilize research, and modernize housing data collection
Amend mortgage insurance rules to permit private mortgage insurers to offer multi-unit mortgage loan insurance on five- to eight-unit residential properties to promote competition and offer lenders more choice
Amend mortgage insurance rules to increase flexibilities for mortgage insurers to offer products to borrowers building new three- and four-unit housing, helping unlock financing for “missing middle” homes such as triplexes and fourplexes
Speed up the construction of up to 16,500 new rental homes though an accelerated $7 billion in low-cost loans under the Apartment Construction Loan Program
Extend the grace period to start repaying Home Buyers’ Plan withdrawals from RRSP from two to five years, for those making a first withdrawal between January 1, 2026 and December 31, 2028
$2.8B reallocation over five years to Build Canada Homes and relevant departments to better align support for Indigenous housing

2.4 Protecting Communities

$352.7M over five years with $57.8 million in remaining amortisation and $82.1M ongoing to the Financial Crimes Agency, supported by additional funding to the Public Prosecution Service of Canada and the Department of Finance Canada
Explore new criminal justice reforms to support the investigation and prosecution of complex financial crimes
Crack down on the criminal abuse of Money Service Businesses (MSBs) and support FINTRAC with new Ministerial Directive powers
Ban crypto ATMs as a means of shutting down a primary method for scammers to defraud victims and for criminals to place their cash proceeds of crime
$17.9M over four years to FINTRAC to prioritise the detection, deterrence, and disruption of the financing that supports and perpetuates extortion and fentanyl trafficking in Canada and to advance a technology and artificial intelligence roadmap

2.5 Empowering Canadians

$755M over five years and $118M ongoing to Canadian Heritage to support Canada’s sport system
$957.8M over five years to Fisheries and Oceans Canada for the Small Craft Harbours Program
$601M to support culturally relevant elementary and secondary education on reserve that meets the needs of students so that First Nations youth can participate fully in Canada’s skilled workforce
$700M over six years to continue to support Indigenous communities to implement their own solutions to protect children and families
$794M to support the Non-Insured Health Benefits Program, which provides First Nations and Inuit with coverage for a range of health products and services

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Click here to view the complete spring economic update documentation.