Canadians will have to wait for boost from Carney’s budget, says economists

Article content

“So Canadians will need to exercise some patience in judging this budget’s ultimate impacts on growth, which might show up over the longer term as the economy benefits from the improvements in capital assets and infrastructure,” they said.

Article content

‘Transitional’ not ‘transformational’: Alberta Central

Article content

“The budget was advertised as ‘transformational,’ but it is rather ‘transitional,'” Charles St-Arnaud, chief economist at credit union Alberta Central, said in a note, “pivoting away from some policies of the previous government.”

Article content

Still, the budget challenges some records set during times of economic stress.

Article content

For example, the last time the deficit hit 2.5 per cent of GDP, outside of the pandemic, was in 2009 during the great financial crisis. That means the debt to GDP ratio will continue to rise, instead of slowing as last year’s fall economic statement had projected.

Article content

St-Arnaud said there were a few areas in the budget where the outcome remains in doubt, including spending cuts of $60 billion over five years. St-Arnaud said caution was also called for on the expectation that private sector business investment will increase by $500 billion, enticed by tax incentives.

Article content

Article content

He warned that the budget could lead to “some creative accounting,” as the government tries to stick to its new fiscal anchors of balancing operating spending and revenues while maintaining a falling deficit-to-GDP ratio.

Article content

“While some may worry about the size of the deficit and the increase in spending, Canada’s economic challenges require bold initiatives, whether to offset the impact of U.S. tariffs on the economy, improve affordability or boost productivity,” St-Arnaud said.

Article content

‘A reluctance to go all-in’: Desjardins

Article content

Canada’s budget 2025 fell short on a few fronts for Desjardins’s chief economist, Jimmy Jean, and deputy chief economist, Randall Bartlett.

Article content

For example, Ottawa said it is targeting $60 billion in spending cuts over the next five years, which is “short of expectations,” Jean and Bartlett said in a note.

Article content

Earlier in the year, the federal finance minister called for $60 billion in cuts over three years. That is half the savings that were previously touted. Meanwhile, tax credits worth $500 billion to help boost investments “fell short of the ambitious expectations the Government of Canada built up prior to budget day,” they said.

Article content

Article content

The government also switched its fiscal anchors to a falling deficit-to-GDP ratio and a balanced operating budget, but Jean and Bartlett think Canada’s AAA credit rating will remain intact despite the changes.

Article content

“We anticipate rating agencies will be satisfied that the fiscal forecast was in line with expectations, and that a debt downgrade is unlikely in the near term as Canada continues to have one of the best fiscal positions among advanced economies,” they said.

Article content

The economists were also underwhelmed by the announced $2.3 billion in spending on defence research and development, which they consider a major wealth generating area.

Article content

“All in, while it is broadly headed in the right direction, Budget 2025 seemed to reflect a reluctance to go all-in on investing in Canada and finding savings to help pay for it,” they said.

Article content

Article content