Ottawa’s latest fiscal update has received a boost from rising oil prices, helping bring down the projected deficit, but economists say uncertainty around policy and infrastructure continues to weigh on long-term investment decisions in Canada’s energy sector.
Finance Minister François-Philippe Champagne tabled the spring economic update with a projected deficit of $66.9 billion for 2025–26—an $11.5 billion improvement from earlier estimates. The stronger outlook is partly attributed to surging global oil prices, which have bolstered federal revenues.
However, economists caution that the improved fiscal position has not yet translated into increased industry investment. Mark Parsons, chief economist at ATB Financial, said energy companies remain in a “wait-and-see” mode as they look for clarity on ongoing negotiations between Ottawa and Alberta.
At the centre of this uncertainty is a memorandum of understanding (MOU) between the federal government and Alberta, signed in November but still lacking detailed implementation. Missed deadlines earlier this year have further delayed confidence in the agreement.
Parsons noted that while higher oil prices have improved sentiment, companies are unlikely to commit to major capital investments or new projects without clarity on regulatory direction and pipeline capacity. Business investment, he added, has remained largely flat over the past year.
Prime Minister Mark Carney has identified investment growth as a key priority, but economists say execution will be critical in translating fiscal strategy into real economic expansion.
Meanwhile, the fiscal update includes a $6-billion commitment toward skilled trades, aiming to train up to 100,000 workers by 2030–31. Charles St-Arnaud, chief economist at Servus Credit Union, said the funding could support institutions like SAIT and NAIT while addressing labour shortages tied to upcoming infrastructure projects.
Despite these measures, affordability relief for Canadians remains limited. St-Arnaud noted that while some pension contribution reductions may provide modest support, broader affordability challenges will depend on long-term economic growth, productivity improvements, and increased investment.
The update underscores a broader reality: while Canada’s fiscal outlook may benefit from volatile commodity markets, sustained economic growth will depend on policy clarity, workforce development, and renewed business confidence.
