Desjardins warns tax cuts and tariff drops will deepen federal deficit

A new financial outlook from Desjardins suggests that the federal government’s fiscal position has weakened due to recent income tax cuts and the removal of counter-tariffs on U.S. goods.
Deputy chief economist Randall Bartlett projects Ottawa’s deficit will reach $74.5 billion this fiscal year — about $6 billion higher than the estimate from the parliamentary budget officer.
The report notes that increased spending on defence and infrastructure, combined with reduced revenues from tax cuts and tariff removals, will contribute to one of the largest deficits outside of a recession or pandemic.
While the policy changes may provide a modest boost to economic growth, Desjardins concludes that the gains will not be enough to offset the lost revenue. Bartlett cautions that Canada should not take its strong credit rating for granted as fiscal pressures continue to mount.