-- Canadian government books look better than expected to end 2025-2026, with the deficit expected to be $11.4 billion smaller than expected, said TD after Tuesday's release of the Spring Economic Update.
However, much of the windfall will be spent over the budget horizon, noted the bank.
The update committed to $37.5 billion in new spending over six years, but much of it was accounted for by previously announced measures, including the enhanced GST rebate, the gasoline tax holiday and the electric vehicle rebate, pointed out TD.
New spending measures include $6 billion to expand skilled trades and the announcement of a new sovereign wealth fund.
Overall, the slightly better near-term deficit leads to a slightly lower trajectory for the federal debt burden, stated the bank. However, debt servicing costs still rise through the budget horizon.
A deeper assessment of the new Canada Strong Fund awaits clarity on many unanswered questions, according to the bank.