Overview
- The Parliamentary Budget Office's June outlook shows deficits about $4.6 billion larger per year on average than the government's spring update and pegs the 2025–26 shortfall near $72 billion.
- The PBO estimates Ottawa has under a one per cent chance of meeting its pledge to shrink the deficit as a share of GDP every year, after stress tests of its projection showed little resilience to shocks.
- The watchdog attributes the gap mainly to weaker personal income‑tax revenue assumptions and higher projected program spending under its baseline compared with the Department of Finance.
- The PBO's baseline assumes tariffs and countermeasures in place as of May 2026 persist and that any new U.S. trade deal would be less favourable, a factor that the government has sought to address in talks in Washington.
- The office projects federal debt rising to about $1.66 trillion by 2030–31 with a debt‑to‑GDP ratio near 42.5 per cent and says it will separately assess the government's second fiscal target while noting the IMF's advice to restore debt‑to‑GDP as the primary anchor.