‘The house is in order,’ says Finance Minister Champagne as Canada’s deficit hits $62.3B. What Budget 2026 means for your money

Economists, on the other hand, are less certain, and the gap between those views matters for your household. A larger interest bill leaves less room for services and tax relief, while heavy government borrowing can affect the rate you pay on a mortgage. Here’s what the numbers show and how they could reach your wallet.

How big is the deficit?

The 2026-27 deficit is $3 billion lower than what was initially projected in the spring, but the budget shows no return to balance. Ottawa projects deficits of $62.5 billion in 2027-28, $57.6 billion in 2028-29, $53.4 billion in 2029-30 and $52.9 billion in 2030-31. Measured against the size of the economy, the shortfall shrinks slightly faster from 1.8% of gross domestic product (GDP) this year to 1.3% by 2030-31, according to Scotiabank Economics.

The government also had more money to work with than expected, largely due to soaring global oil prices that have caused revenues to increase since the spring, according to The Globe and Mail. Rather than use that windfall to decrease the deficit, the government chose to spend it. Champagne said two-thirds of the new measures are meant to boost the economy, with the rest aimed at the cost of living.

What the interest bill costs Canadians

This year, the federal government expects to spend $60.2 billion servicing its debt, about 10 cents of every tax dollar. That’s more than the $57.4 billion it sends to provinces in health transfers. By 2030, about 12 cents of every tax dollar will go to debt charges, according to BNN Bloomberg.

In dollar terms, annual debt charges are projected to reach $85.5 billion by 2030-31, a trend that the Parliamentary Budget Officer (PBO), an independent fiscal watchdog, has flagged as a concern. Every dollar spent on interest is one that can’t go towards funding health care, housing or tax relief. Before the budget, the PBO said it was skeptical that Ottawa would meet its fiscal targets.

Ottawa argues: The debt is manageable

In defence of running a deficit, the federal government points to several signs of economic strength. For instance, Ottawa says it will balance day-to-day operating spending by 2027-28 — a year ahead of schedule — so that borrowing can be allocated to capital projects such as infrastructure. Plus, this year’s budget points out that Canada is one of only two G7 economies, alongside Germany, to hold AAA ratings from multiple major credit rating agencies. Additionally, its 10-year government bond yield is among the lowest in the G7.

Champagne also argues that public debt charges remain low by historical standards.

What economists are watching

Don Drummond, an economist at Queen’s University, warned that the growing debt burden will limit the government’s options in the future, noting that the aid Canadians receive now is debt financed and will eventually have to be paid back. “The government, on behalf of Canadians, is highly indebted, and this budget doesn’t do anything to reduce that,” he said.