Policy Matters: What the Spring Economic Statement Means for Business

Instead of tabling a budget in spring 2025, the federal government flipped the traditional schedule of its fiscal reports, delivering the budget in November 2025 and the economic update late April 2026.

It’s been a few weeks since the Spring Economic Statement came out, making it “old news” in some cases, but what it said and what it didn’t say will have long-lasting impacts on Canada’s business community.

What is an economic statement (AKA fiscal update)?

The fiscal update gives Canadians an idea of how the economy has changed since the budget and how fiscal projections are tracking. As the Globe and Mail put it, “Economic statements primarily focus on updating forecasts for revenue and expenses and their impact on Ottawa’s bottom line. They sometimes include new spending.” In the past, some governments used the fiscal update as a mini-budget and an opportunity to introduce new legislation.

What did the spring economic statement have in store?

Among its marquee offerings, the update promised a few key items:

• The 2025-26 deficit is projected to be $66.9 billion (2.1% of GDP), $11.5 billion lower than anticipated in Budget 2025.
• The government announced the Canada Strong Fund — a sovereign wealth fund of $25 billion over three years to invest in key, strategic Canadian projects.
• There is a new national effort to recruit, train and hire 80,000 to 100,000 new skilled trade workers by 2030–31.

Canada’s competitiveness remains a challenge and an opportunity

Economic competitiveness is our ability to compete against other global players for international talent, trade and investment. It’s also linked to a country’s wealth and prosperity, which determine our standard of living.

There are a lot of factors that have contributed to our decline in this area — low productivity, unreliable supply chains, nation-wide skills gaps, regulatory red tape, an outdated tax system, internal trade barriers and insufficient housing. At the Canadian Chamber, these factors are familiar topics, with many a Policy Matters edition tackling them in some way or another.

Now more than ever, businesses need to be given the tools and means to grow, scale, innovate and invest. We cannot afford to burden businesses of any size, but particularly the small businesses that make up 98% of our economy, with excessive red tape, high taxes, and a high-cost operating environment, especially when the U.S. can still look appealing as an alternative place for investment.

With the right policy choices, Canada can strengthen its competitiveness and position itself as a leader in an increasingly uncertain global economy.

Internal trade

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Recently, an International Monetary Fund report noted that “eliminating all non-geographic, policy-related trade barriers could raise Canada’s real GDP by roughly seven percent over the long run.”

As a result of freer trade within Canada, Canadians would enjoy lower prices and increased choice, workers would have greater mobility (particularly in fields with varying professional and educational requirements like healthcare), and our businesses would have an easier time scaling for success since what works for one province or territory would be good enough for another.

Recommendation

If momentum slows, the federal government should consider applying conditions on major federal transfers to provinces and territories requiring the elimination of specific barriers to interprovincial trade and labour mobility, as noted in the 2024 Fall Economic Statement.

Taxes

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Canada’s tax competitiveness is a growing issue across many sectors. Whether compared to the U.S. or other jurisdictions around the world, for Canada to expect Foregin Direct Investment and companies to want to more and stay here, we must make the tax system competitive and attractive.

Further, every social program dollar that supports healthcare, schools, roads and our defence, starts as a private sector dollar. That means we need to help businesses grow, which in turn will see company profits grow, leading to growing government tax revenues for those very programs.

Recommendation

Conduct a top-to-bottom review of the Canadian tax system to reduce taxes on business, including employer costs, address international tax schemes that unfairly target Canadian companies over companies that reside in the U.S. or other jurisdictions, and commit to closing tax competitivness gaps so that companies want to stay here and grow.

Regulatory

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Our Business Data Lab projects that the total number of federal regulatory requirements reached ~348,700 in 2025 — up from 320,900 in 2021. Businesses now spend over 3.1 million hours annually complying with these rules. Imagine what they could achieve if they didn’t spend so much time on paperwork? The government needs to address regulatory self-contradictions that slow businesses down, prevent them from growing, and even drive them to invest in greener pastures.

Recommendation

The government, led by Treasury Board, has done an effective job of building a robust and cross-government effort to eliminate red tape and regulations. The government should pivot to reducing the regulatory burden on business and commit to requiring that for every new regulation, an equally burdensome regulation on business must be removed.

Workforce

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Canada is in population decline. We are now one of the “lowest-low” fertility nations. Our birth rate is far below the replacement rate required for a stable population and immigration has narrowed significantly. For the first time since the 1950s, Canada will have zero population growth in 2026.

If Canada is to embrace big nation-building projects, we’re going to need an equally big and skilled workforce. But, as was discussed during one of our panels at the Future of Business Summit, Canada has capacity limitations. Canada’s well-known labour shortages mean that we need 380,000 new bodies in construction by 2034 to build everything we want and need to. Major projects must be looked at as part of an ecosystem, not in isolation.

We’re supportive of the government’s vision to focus on trades, talent and young people and its particular focus on supporting small- and medium-sized enterprises as a major employer of private sector workers. However, this government will need to revisit its restrictive approach to immigration if we’re going to be serious about our talent needs and the country’s growth ambition.  

Recommendation

• Persistent skills mismatches, underemployment of newcomers, and slow training responsiveness are impacting our productivity and competitiveness. Canada’s economic growth requires an integrated talent strategy that links immigration, skills development and workforce participation to real-time economic demand.
• Working in collaboration with the provinces and territories, the federal government should accelerate the full utilization of skills through a coordinated national approach to credential recognition and skills-based hiring to unlock existing talent supply and reduce structural labour shortages.

What’s next?

Based on this new fiscal update schedule, the next major update will be the 2026 fall budget and it’s critical budget is informed by the needs of Canadian businesses — especially the needs that were previously unaddressed.

As for us, we’ll continue to make sure that the perspectives of businesses of all sizes, sectors and regions are at the table when we deliver our pre-budget submission to government.