The Fiscal Reality Check
Federal program spending has surged 32 % since 2019, while public-sector employment grew 10.8 % year-over-year in 2024. Debt-servicing now exceeds $50 billion annually — Canada’s fourth-largest budget item.
| Fiscal Metric | 2019 | 2024 | 2025 (est.) | Source |
|---|---|---|---|---|
| Program Spending ($ bn) | $375 | $495 | $508 | PBO |
| Federal Debt / GDP | 30.9 % | 42.4 % | 43.1 % | Finance Canada |
| Debt Service Cost ($ bn) | $26 | $49 | $52 | Finance Canada |
Implications for Business
- Public hiring outpaces private investment, masking weak productivity.
- Rising yields may crowd out corporate borrowing.
- Fiscal tightening in 2026 could slow public procurement cycles.
What Leaders Can Do
- Prepare for leaner budgets. Build public-sector demand forecasts into revenue models.
- Pivot to infrastructure partnerships. PPPs and green-bond financing will replace direct grants.
- Track fiscal signals. Interest-rate sensitivity now critical for long-term capital planning.
- Advocate for efficiency. Business coalitions can push for outcome-based spending rather than expansion.
Arcus Insight: the next growth phase will depend on how well government converts spending into productivity. Private-sector leaders should position as co-investors, not beneficiaries.