Spring update expected to show improved deficit outlook as affordability concerns persist
Prime Minister Mark Carney is pointing to stronger-than-expected federal finances ahead of Tuesday’s spring economic update, according to reporting from The Canadian Press, even as new polling suggests Canadians remain divided on his government’s overall performance.
The mid-year fiscal update, often seen as a mini-budget, will revise Ottawa’s economic projections and could include new spending measures. It follows a fall fiscal plan that projected a $78.3 billion deficit for the last fiscal year, with red ink expected to average roughly $64 billion annually over five years.
However, recent fiscal data indicates the government’s position may be improving. The deficit totalled $25.5 billion over the first 11 months of the fiscal year, and while March typically adds significantly to that figure, some economists anticipate a smaller shortfall than initially forecast.
Carney hinted Monday that the update will reflect that improvement. When asked why the deficit could come in lower than expected, he said, “Because we’re good fiscal managers.”
“We focus on the numbers. And we were determined to get spending down with a lot of very … difficult decisions. You can’t do everything at the same time,” he added.
The government has defended its willingness to run deeper deficits in order to fund major infrastructure, boost defence spending and reduce reliance on the United States. That strategy includes a newly announced $25 billion sovereign wealth fund designed to co-invest with private capital in large-scale national projects.
At the same time, Ottawa has introduced additional affordability measures since the fall, including an enhanced GST benefit and a temporary pause on the federal fuel excise tax.
The spring update comes as the Liberals consolidate political power following recent byelection gains that secured a majority government, giving Carney greater latitude to advance his economic agenda.
Negative view
However, new data from the Angus Reid Institute suggests Canadians remain unconvinced on key domestic issues.
While 58% approve of Carney’s performance after one year in office, the public is evenly split on whether his government has delivered on its promises, with 41% saying it has met expectations and an equal share saying it has not.
More broadly, sentiment about the country’s direction leans negative. Forty-two per cent of Canadians say the country is on the wrong track, compared to 34% who believe it is heading in the right direction.
The polling highlights a disconnect between the government’s international and domestic performance. Majorities say the Liberals have met or exceeded expectations on improving Canada’s global standing (64%), diversifying trade (57%) and managing relations with the United States (56%).
But on affordability — a defining issue for voters — the government is falling short. Seven in 10 Canadians say it has not done enough to address the rising cost of living, while 67% say the same about housing affordability.
Those concerns are expected to dominate the policy agenda ahead. More than half of Canadians (52%) identify reducing living costs as the government’s biggest challenge over the next year, far ahead of managing relations with U.S. President Donald Trump (31%).
Despite those pressures, the Liberals maintain a lead in voter support. If an election were held today, 42% say they would back the party, compared to 35% for the Conservatives.
