2022 Canadian Budget Overview

Canada’s 2022 budget season has come to a close. Across the board, revenues were much stronger than expected on the back of higher inflation and economic growth. Spending was more mixed, but pandemic-related expenditures were generally lower than anticipated. As a result, the federal and provincial governments all saw an improvement in their 2021–2022 deficit estimates and starting points for the rest of their fiscal forecast. But what they did with this fiscal windfall varied greatly. Some chose to set a portion of it aside for a rainy day, while others spent it all. Importantly in this context, we expect economic activity to come in weaker than most governments currently project for 2023 and beyond. If that happens, some governments could be in a more challenging fiscal situation than they anticipated when they published their more recent fiscal plans.