TD Securities analysts anticipate that Canada's Spring Economic Update (SEU), scheduled for release at 16:00 ET on Tuesday, will project a CAD 60 billion deficit over 2026–27. This represents a modest improvement compared to the CAD 65.4 billion shortfall outlined in Budget 2025 [1]. The analysts attribute this improvement to stronger budget revenues, which are the result of upward revisions to nominal Gross Domestic Product (GDP), as well as only modest new spending introduced in the update [1].
TD Securities does not expect significant changes to the government's borrowing plans for 2026–27. They note that Treasury bills (T-bills) are expected to absorb the funding requirements for new spending measures [1]. Additionally, the new Canada Strong Fund will require approximately CAD 8 billion per year in funding through 2028–29, with its CAD 25 billion endowment to be distributed over three years [1].
Overall, the fiscal update is seen as a modest improvement in the government's fiscal outlook, driven by stronger revenues and restrained new expenditures, with limited implications for borrowing or market disruption [1].
CONCLUSION
Canada's Spring Economic Update is expected to show a slightly improved fiscal position, with a projected CAD 60 billion deficit over 2026–27 due to stronger revenues and modest new spending. Borrowing plans are not anticipated to change materially, and the market impact is likely to be limited.