Overview
The Spring Economic Update 2026 (available here) tabled by Finance Minister François-Philippe Champagne, is a 178- page interim fiscal document updating Parliament on revised deficit projections and new spending measures since Budget 2025. It is set against two simultaneous shocks: sustained U.S. tariffs on Canadian exports, and a Middle East conflict disrupting roughly 20% of global oil and LNG shipments through the Strait of Hormuz.
Fiscal Position
(See Appendix: Figures 1 and 2)
- 2025-26 projected deficit: $66.9 billion; down $11.5 billion from Budget 2025’s $78.4 billion projection
- Deficits decline to $53.2 billion (1.4% of GDP) by 2030-31
- Federal debt-to-GDP: 41.1% in 2025-26, peaking at 41.9% in 2028-29, then declining; more than one full percentage point below Budget 2025 projections
- Budgetary revenues revised up by an average of $7.2 billion annually versus Budget 2025, driven primarily by stronger personal and corporate income taxes (+$8.6B/year on average)
- New measures in this update cost $37.5 billion net over six years, with 45% directed to affordability
- Two fiscal anchors confirmed on track: day-to-day operating spending balanced with revenues by 2028-29; declining deficit-to-GDP ratio maintained
Key economic indicators
(See Appendix: Figures 3 and 4)
- Real GDP growth: 1.7% in 2025 (second highest in G7); private sector forecast 1.1% in 2026, 1.9% in 2027
- Real GDP not expected to return to pre-tariff path; projected 1.6% below the 2024 Fall Economic Statement by 2029
- Unemployment: 6.7% in March 2026, down from 7.1% peak in September 2025; 0.5 pp below Budget 2025 forecast
- CPI inflation: 2.4% in March 2026, within the Bank of Canada’s 1-3% target for 27 consecutive months
- Bank of Canada policy rate held at 2.25% through 2026; down 275 bps cumulatively since early 2024
- Nominal GDP level revised up $46 billion above Budget 2025 for 2026, driven by higher oil prices and stronger H2 2025 results
- Canadian dollar assumed at 73.7 US cents for 2026, below the Budget 2025 outlook of 75.1 cents
Canada Strong Fund
Canada’s first national sovereign wealth fund, investing in strategic Canadian companies and infrastructure projects. Individual Canadians can participate through a retail investment product and receive financial returns directly, giving the fund a broader political constituency than a traditional Crown investment vehicle.
Alberta Focused
(See Appendix: Figures 3, 4, 5, and 6)
Oil price outlook
- WTI assumed at US$73/bbl for 2026, up from Budget 2025 assumption of US$65/bbl
- WTI peaked near US$100/bbl at conflict onset; futures curve points to roughly US$75 by year-end as Hormuz shipping normalises
- A persistent 10% WTI increase (~US$6.50/bbl) raises nominal GDP by ~$18B in year one and ~$22B in year two, and improves the federal budgetary balance by approximately $2.0 billion per year
Alberta and energy sector relevance
- Oil and gas accounts for ~5% of Canadian GDP, ~10% of business investment, and ~13% of exports
- As a net energy exporter with limited Hormuz exposure, Canada benefits from higher prices through improved terms of trade; higher energy-sector profits, investment, employment, and government revenues
- Caution noted: temporary supply-driven price spikes are less likely to generate sustained investment responses when uncertainty is elevated; the “Global Supply Disruptions” scenario models a case where Canadian energy producers deliver a muted investment response despite high prices
Export diversification
- Trans Mountain Expansion: non-US share of crude exports rose from under 3% pre-TMX to roughly 10% in 2025; further projects could expand total takeaway capacity by up to 12%
- LNG Canada Phase 1 (Kitimat, BC) began exports June 2025; LNG now represents 7.5% of total natural gas exports
- 11 additional LNG projects in development nationally, including 7 in BC; combined potential investment of $150B+ and potential capacity of ~50 million tonnes per annum by the early 2030s
- Non-US goods and services exports up $33 billion in 2025 vs. 2024, tracking toward the government’s stated target of $300 billion more in overseas trade within a decade
New tax measures relevant to energy
- CCUS Investment Tax Credit expanded to cover enhanced oil recovery (EOR); direct application for Alberta oil sands and conventional producers
- New accelerated capital cost allowance rates introduced for low-carbon LNG facilities
Major projects and defence
(See Appendix: Figure 3)
- Major Projects Office advancing 21 nation-building initiatives; 60,000 jobs during construction; $125 billion in new investment
- Named projects: Bay du Nord (Newfoundland, described as having “advanced significantly”), copper and gold mine expansions (BC), Darlington New Nuclear (Ontario), Inuit-owned renewable energy (Iqaluit), First Nation equity in the Chatham-to-Lakeshore transmission line
- Defence Industrial Strategy: 50% increase in defence exports targeted; 125,000 careers supported; $180 billion in total direct defence procurement investment by 2035
- NATO 2% defence expenditure target met in March 2026 — five years ahead of schedule
Workers and young people
(See Appendix: Figure 7)
- Team Canada Strong: 80,000-100,000 new Red Seal skilled trades workers by 2030-31; $400/week income top-up during in-class training (up to $16,000 per apprentice); $10,000 employer wage incentive; $5,000 Red Seal completion bonus; total cost $5.98 billion over six years
- CPP base rate reduction: 9.9% to 9.5% effective January 1, 2027; unanimous provincial/territorial support obtained
- Employee Ownership Trust Tax Exemption made permanent
- Student grants and loans: extended for 2026-27; 571,000 students benefit from grant increases, 422,000 from loan limit increase; cost $1.107 billion
Affordability
(See Appendix: Figure 7)
- Canada Groceries and Essentials Benefit: 12 million+ Canadians; payments begin June 5, 2026; cost $11.806 billion over six years
- Fuel excise tax suspension: until September 7, 2026; gasoline down ~12 cents/litre, diesel down ~16 cents/litre at implementation on April 20; cost $2.41 billion
- Housing: national home prices down ~20% from peak; rents down ~9% nationally; 260,000 housing starts in 2025 (vs. 200,000 average 2000–2019); $1.7 billion to provinces/territories to reduce development fees; $7 billion+ in low-cost CMHC financing accelerated
- Rental affordability: new tenant rent as share of disposable income improved to 29%, down from 34% peak in October 2023
- NSF fee cap set at $10
Communities
(See Appendix: Figure 7)
- Financial Crimes Agency: $418 million over six years; 2025 reported fraud losses were $704 million (likely an underestimate, only 5–10% of fraud is reported)
- Sport: $755 million over five years plus $118 million ongoing ($660M National Sport Organisations, $50M major events, $45M high-performance athletes)
- Small craft harbours: $957.8 million over five years; 35% increase over 10-year average; supports 45,000+ jobs in fishing and seafood
- Indigenous communities: $601M (2026-27, on-reserve education); $794M (2026-27, Non-Insured Health Benefits); $700M over six years (child and family services).