Canada.. Will rejecting the budget lead to early elections and an economic disaster? | economy

Al Jazeera Net correspondents

AlbertaWith the final vote of confidence on the 2025-2026 federal budget approaching in the sessions that will begin on the 17th of this month, the Canadian Parliament is experiencing a state of political tension within its corridors, as this vote is considered a decisive test and challenge to the fate of Mark Carney’s minority Liberal government, which may lead to its fall and early elections to be held if it does not gain the support of one of the other political parties within Parliament to pass it.

Carney announced the first federal budget of his term on November 4, titled “Strong Canada,” which includes 141 billion Canadian dollars ($100 billion) in new spending, offset by a deficit of 78.3 billion Canadian dollars ($55.8 billion) for the current fiscal year, expenditures worth 585.9 billion Canadian dollars ($417.9 billion), and economic growth of about 1% annually over the next two years, which is Much lower than the forecast made late last year.

According to the government’s expectations, the debt-to-GDP ratio will rise in the coming years, and the budget allocates 81.8 billion Canadian dollars ($57.8 billion) over 5 years to rebuild, rearm, and reinvest in the Canadian Armed Forces, and eliminate 28,000 jobs in the public sector by 2029, which sparked sharp criticism from the opposition due to potential austerity and the absence of radical reforms.

A fragile success and growing anticipation

In sessions on November 6-7, Parliament witnessed 3 preliminary votes on the budget so far, in which the government succeeded by a narrow margin, as the Liberal government, which currently has 170 seats (after former conservative MP Chris Dantremont joined on November 4 of this year), needs 172 positive votes, that is, the support of two additional representatives or the abstention of at least 5 from the opposition.

The Conservative Party has declined to 142 seats. They strongly reject the budget and describe it as “insufficient to make Canada affordable,” and will lead to an increase in the cost of living and housing. The Bloc Quebecois Party (21 seats) stipulates additional funding for their province. The Green Party (2 seats) opposes the proposed budget and demands amendments to it, while the Democratic Party (7 seats) has not yet announced its position.

In this context, Carney confirmed in a press conference that his government is determined to cooperate with all members of Parliament, and that it believes in the idea of ​​listening and receiving ideas, indicating that he listened to new and good ideas and they were integrated.

Expectations of passing the budget

In turn, Professor of Economics at McMaster University, Dr. Atef Qubrisi, expressed his exclusion of the collapse of the government, saying, “I think that the collapse of the government is currently unlikely, because the New Democrats have no interest in holding elections at the present time, especially since it has not yet completed the process of electing its new leader, and the Quebec Party also does not think it is seeking escalation and engaging in electoral battles.”

Speaking to Al Jazeera Net, Cypriot expects that the Liberal government will remain in place for reasons outside the budget itself, noting that the government’s failure to obtain Parliament’s confidence will be very costly for all Canadians, especially as they face a fierce economic war with US President Donald Trump.

Cypriot believes that there is a Canadian consensus to unite Canadian forces even after this economic war, especially after the failure of Trump and the Republicans in the recent elections in New York, Virginia, Pennsylvania, and California, and that there are signs of a coup against Trump and his policies in Congress and the Supreme Court, according to his opinion.

As for the economist and director of the Public Policy Innovations Company, Dr. Neelam Bedi, he saw in his speech – to Al Jazeera Net – that the proposed federal budget has a strong chance of being approved in Parliament, for the following reasons:

• The budget comes at a time when Canada is focusing on strengthening its domestic economy, diversifying its trade dependence on the United States, and building a solid fiscal base (as it has one of the lowest net debt-to-GDP ratios among the G7 countries).
• The budget focuses on long-term investments in clean energy, infrastructure, and other sectors that enhance productivity.
• These investments are expected to generate regional and industrial activity, reducing opposition resistance.
• The budget provides incentives for businesses, with an emphasis on enhancing growth, competitiveness and productivity.

Overthrowing the government is costly economically and politically

Regarding the economic repercussions if the budget is not passed and the government falls, academic Atef Qebrousi says that failure to pass the budget will have serious negative effects, in light of the economic recession that has begun to appear, inflation rates continuing to rise, and the continued relocation of American industrial companies to the United States, as all of these factors will increase the difficulty of the fragile economic situation and exacerbate the suffering of citizens that has continued for several years.

As for the economic expert, Bedi, he pointed out that voting against the budget and toppling the government may not be in the interest of the opposition parties, as some of them are not well prepared to run in the elections immediately, and will be seen as irresponsible if it leads to calling elections at a time when trade negotiations between Canada and the United States are going through a very sensitive stage.

He adds that the economic repercussions of not passing the budget will make living conditions more difficult, Canadians will lose more of their businesses and jobs, and unemployment rates will rise.

In turn, economists at the Fraser Institute warned that continued high government spending without achieving fiscal balance is pushing Canada toward an imminent “financial crisis,” as federal debt has risen to the equivalent of 70% of GDP, and may reach 79.2% by 2028/2029.

In an analysis published by the institute on its website, experts indicated that if the failure to pass the budget leads to the fall of the government, the resulting political turmoil will accelerate the pace of this crisis, leading to higher interest rates and lower government revenues, just as happened in the 1990s. They assert: “When debt growth exceeds the speed of economic growth, the government’s financial situation becomes on an unsustainable path that may lead to a financial crisis, and the Carney government appears to be moving in the exact opposite direction.”