Ottawa’s operating spending – not capital – driving deeper deficits: PBO

The parliamentary budget officer projects Ottawa will blow past the new fiscal anchors set out in last week’s 2025 federal budget.

Interim budget officer Jason Jacques says in a new analysis of the budget that Ottawa is set to run an average deficit of $64.3 billion over the next five years — double the level set out in the federal government’s last fiscal update in late 2024.

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Despite Prime Minister Mark Carney’s talk of shifting government spending to capital investment rather than operating costs, Jacques says the deeper deficits are being driven by new day-to-day program spending.

The federal Liberals set fiscal anchors — benchmarks to show prudent financial management — to balance the operating side of the budget in three years and maintain a declining deficit-to-GDP ratio over the planning horizon.

Jacques says Ottawa is using overly expansive definitions of capital spending and predicts new spending plans will leave the government with an operating deficit.

The PBO’s analysis of the budget’s outlook also projects it’s not likely the government will meet its goal of shrinking the deficit as a share of GDP.

This report by The Canadian Press was first published Nov. 14, 2025.