Canada's federal deficit to hit $74.5B in 2025, driven by tax cuts and lost revenue, warns Desjardins.

A new Desjardins report warns Canada’s federal deficit will reach $74.5 billion in 2025, $6 billion above the parliamentary budget officer’s estimate, due to recent tax cuts and the removal of counter-tariffs on U.S. goods. Increased spending on defense and infrastructure, combined with lost tax revenue, is widening the gap, despite potential short-term economic growth. The report cautions that ongoing U.S. trade uncertainty could threaten Canada’s strong credit rating, urging fiscal caution ahead of the November 4 federal budget. Meanwhile, Ontario projects a $14.6-billion deficit for 2025-26, with modest growth forecast amid tariff pressures, as it aims to balance its books by 2027-28.