Canada budget targets economic independence with investment, defence and housing spending

Canadian Prime Minister Mark Carney unveiled his government's second federal budget in Canada on November 5, setting out spending on economic independence, housing and defence as the country seeks to reduce its reliance on the United States.¹

Investment and trade

Under the title Masters of Our Destiny, the budget sets out C$142.1 billion in expenditures and tax relief over a number of years. Its economic programme combines incentives for business investment with plans to expand trade beyond the United States and support Canadian companies through a national sovereign wealth fund.²³

The government projects expenditure of C$603 billion and a deficit of C$62.3 billion for 2026-27. That deficit estimate is C$3 billion below the forecast made in April. The budget does not, however, fully incorporate the cost of reaching Canada's defence and security spending target.²³

The trade conflict launched by Donald Trump is forecast to limit Canada's economic expansion toward the end of this year and at the start of the next. Carney wants exports to markets outside the United States to double by 2035, while pursuing stronger economic relationships with Europe and Asia.²³

Under an earlier-announced tax measure, companies could immediately write off eligible investments. The policy would reduce the effective Canadian tax burden for fresh investment to 6.4%, less than half the equivalent rate in the United States. The proposed sovereign wealth fund would direct investment towards Canadian companies and major projects.²³

Canada has allocated nearly C$44 billion since March 2025 to help workers and businesses affected by American tariffs. The BBC also reported that the new budget includes assistance for tariff-hit sectors. Canada left trade negotiations in August over American demands that Carney said endangered Canadian sovereignty and cultural protections.¹²³

Housing and immigration

The domestic measures include C$11.2 billion over four years to address homelessness, with funding for supportive housing and treatment. According to the BBC, a grocery benefit is estimated to deliver C$2,570 to a family of four within a year.¹

Permanent-resident admissions will remain at 380,000 a year until 2028, while temporary-resident arrivals will gradually decline to 370,000. The budget also proposes an income-tax exemption for original creative and artistic work and a free national digital library, starting with at least 200 titles, the BBC reported.¹

Defence and technological capacity

The budget assigns C$2.7 billion to Canadian space technology and launch facilities, alongside C$2.3 billion over five years for a marketplace for Canadian-made drones. It also increases funding for Operation Reassurance, according to the BBC.¹

Canada says it remains on course to devote 5% of GDP to defence and security by 2035 under NATO's target. The gap between that commitment and the costs included in the budget leaves the full financial requirements of the pledge outside the current accounting.²³