Federal Budget 2026: Carney Government Targets Investment, Productivity and Economic Independence

OTTAWA — Prime Minister Mark Carney's Liberal government is preparing to table Budget 2026 on Thursday, outlining plans to strengthen Canada's economy, attract private investment and reduce dependence on the United States.

The budget, the second under Carney, comes amid ongoing trade tensions with U.S. President Donald Trump and growing pressure to improve Canada's productivity.

Finance Minister François-Philippe Champagne says the government wants to change Canada's economic growth model by encouraging businesses to invest in machinery, technology and infrastructure.

A major initiative is the previously announced $36-billion “productivity mega-deduction,” which would provide tax incentives for businesses purchasing new equipment over five years. Additional measures supporting small and medium-sized businesses are also expected.

The budget will outline immigration targets and spending priorities for defence, infrastructure and major projects aimed at expanding Canada's international trade opportunities.

However, concerns remain about federal borrowing and rising debt-servicing costs.

Conservative Leader Pierre Poilievre has criticized the government's deficits, urging Carney to rein in spending.

The parliamentary budget officer has warned that debt-servicing costs are expected to become the fastest-growing federal expense, potentially limiting future spending flexibility.

The Liberals argue that strategic investments are necessary to strengthen Canada's economic sovereignty and long-term competitiveness.

Economists will closely examine whether increased borrowing delivers measurable productivity gains, attracts private capital and supports sustainable economic growth.

With a majority in Parliament, the Liberals are positioned to advance their fiscal agenda, though the budget will face debate and scrutiny in the coming weeks.