Key Takeaways
- The federal government reversed its fiscal calendar, releasing the 2025 budget in November 2025 and the Spring Economic Statement in late April 2026, shifting the timing of fiscal updates.
- The Spring Economic Statement projects a 2025‑26 deficit of $66.9 billion (2.1% of GDP), $11.5 billion lower than the Budget 2025 forecast, and introduces the Canada Strong Fund ($25 billion over three years) and a national skilled‑trade recruitment target of 80,000–100,000 workers by 2030‑31.
- Canada’s competitiveness is hampered by low productivity, supply‑chain fragility, skills gaps, regulatory red tape, an outdated tax system, internal trade barriers, and housing shortages.
- Internal trade liberalisation could lift real GDP by roughly 7 %; the report recommends conditioning major federal transfers on provinces removing specific interprovincial barriers.
- Tax competitiveness relative to the U.S. and other jurisdictions is deteriorating; a comprehensive tax‑system review is urged to reduce business taxes, counter unfair international tax schemes, and close competitiveness gaps.
- Federal regulatory requirements have risen to ~348,700 (2025), consuming over 3.1 million compliance hours annually; the advice is to adopt a “one‑in, one‑out” rule for new regulations.
- With zero population growth projected for 2026 and persistent labour shortages (e.g., 380,000 construction workers needed by 2034), Canada must integrate immigration, skills development, and workforce participation through coordinated credential recognition and skills‑based hiring.
- The next major fiscal update will be the 2026 fall budget; ongoing business‑community input is essential to ensure policies address the gaps identified in the Spring Economic Statement.
Fiscal Calendar Shift and the Spring Economic Statement
Instead of presenting a budget in the traditional spring window, the federal government delivered the 2025‑26 budget in November 2025 and released the Spring Economic Statement in late April 2026. This reversal means the statement now serves as the primary mid‑year fiscal update, revising revenue and expense forecasts and outlining new spending initiatives. As the Globe and Mail noted, economic statements focus on updating projections for Ottawa’s bottom line and occasionally introduce fresh policy measures.
Core Provisions of the Spring Economic Statement
The statement highlighted several marquee items. First, the projected deficit for 2025‑26 is $66.9 billion, equivalent to 2.1% of GDP—a reduction of $11.5 billion relative to the Budget 2025 estimate. Second, it announced the creation of the Canada Strong Fund, a sovereign‑wealth‑style vehicle earmarking $25 billion over three years for strategic Canadian projects. Third, it set a national goal to recruit, train, and hire between 80,000 and 100,000 new skilled‑trade workers by the 2030‑31 fiscal year, aiming to alleviate chronic labour shortages in construction, manufacturing, and related sectors.
Canada’s Competitiveness Landscape
Economic competitiveness—our ability to attract global talent, trade, and investment—remains a pressing challenge. Low productivity, unreliable supply chains, nationwide skills gaps, regulatory red tape, an outdated tax system, internal trade barriers, and insufficient housing collectively erode our standard of living. The Canadian Chamber has repeatedly flagged these issues in its Policy Matters series, emphasizing that small businesses, which constitute 98% of the economy, are especially vulnerable to excessive compliance costs and high‑tax environments. Addressing these weaknesses is essential if Canada wishes to position itself as a leader amid global uncertainty.
Internal Trade Barriers
An International Monetary Fund study estimated that eliminating all non‑geographic, policy‑related trade barriers could boost Canada’s real GDP by roughly seven percent over the long run. freer interprovincial trade would lower consumer prices, expand product choice, enhance labour mobility—particularly in regulated professions like healthcare—and enable businesses to scale more easily across provincial lines.
Recommendation on Internal Trade
To realise these gains, the federal government should consider attaching conditions to major federal transfers to provinces and territories, requiring the elimination of specific interprovincial trade and labour‑mobility barriers. This approach mirrors the conditionality proposed in the 2024 Fall Economic Statement and would incentivize provincial cooperation.
Tax Competitiveness
Canada’s tax regime is increasingly uncompetitive when benchmarked against the United States and other jurisdictions. For foreign direct investment to flow and for domestic firms to remain and expand, the tax system must be made more attractive. Importantly, every dollar that funds health care, education, infrastructure, and defence originates as private‑sector profit; thus, fostering business growth directly expands the tax base that supports those public services.
Recommendation on Tax Reform
A top‑to‑bottom review of the Canadian tax system is recommended. This review should aim to reduce taxes on businesses—including employer‑side costs—address international tax arrangements that unfairly disadvantage Canadian firms relative to U.S. or other‑jurisdiction competitors, and commit to closing any remaining tax competitiveness gaps.
Regulatory Burden
The Business Data Lab estimates that federal regulatory requirements rose to approximately 348,700 in 2025, up from 320,900 in 2021. Compliance now consumes over 3.1 million hours annually, diverting resources from innovation and growth. Self‑contradictory or redundant rules further slow firms and can push investment toward jurisdictions with lighter regulatory loads.
Recommendation on Regulation
While the Treasury Board has built a cross‑government framework to reduce red tape, the next step is to enforce a “one‑in, one‑out” principle: for every new regulation introduced, an existing regulation of comparable burden must be eliminated. This would help stabilise the total regulatory load while encouraging continual improvement.
Workforce and Demographic Pressures
Canada is experiencing a demographic slowdown, with fertility rates far below replacement level and immigration having narrowed. Consequently, the country is projected to see zero population growth in 2026 for the first time since the 1950s. Yet ambitious nation‑building projects—infrastructure, clean energy, housing—demand a large, skilled labour force. The construction sector alone will need an estimated 380,000 additional workers by 2034.
The government’s focus on trades, talent, and support for small‑ and medium‑sized enterprises is welcome, but its restrictive immigration stance undermines these goals. Persistent skills mismatches, underemployment of newcomers, and sluggish training responses limit productivity and competitiveness.
Recommendation on Workforce Strategy
Canada requires an integrated talent strategy that aligns immigration, skills development, and workforce participation with real‑time economic demand. Working alongside provinces and territories, the federal government should accelerate a national approach to credential recognition and skills‑based hiring, thereby unlocking existing talent pools and reducing structural labour shortages.
Looking Ahead
Under the revised fiscal calendar, the next major update will be the 2026 fall budget. It is imperative that this budget be informed by the unaddressed needs of Canadian businesses—particularly regarding competitiveness, internal trade, tax fairness, regulatory efficiency, and workforce supply. The Canadian Chamber will continue to channel the perspectives of businesses of all sizes, sectors, and regions into its pre‑budget submissions, ensuring that policy decisions reflect the realities on the ground.
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