Business Council Warns of ‘Investment Crisis’ in Letter to Ottawa on Budget

The Business Council of Canada (BCC) has warned in an open letter to the federal government that the next budget must tackle the issues of declining investment and growing deficits.

The BCC said in its Oct. 1 letter that the country needs more public and private investment to increase productivity and boost growth, as it is currently “in the midst of an investment crisis.” The letter, written by President and CEO Goldy Hyder, also raises concerns with Canada’s current fiscal situation, as the upcoming budget is expected to present a large deficit.

“We cannot borrow our way to prosperity. If your government decides that deficit-financed investment does need to take place, it must be done responsibly,” the letter states, adding that the government must provide a plan to reduce the deficit year after year.

The letter said the BCC had just completed consultations with Canadian economists and policy experts, as well as conducted a survey of members, and investments and deficits were the top issues raised. BCC noted that even before U.S. President Donald Trump began imposing tariffs on Canada, business investment in Canada had been weakening.

During the last federal election, the Liberal Party promised to “spend less and invest more” in Canada, which is a promise Prime Minister Mark Carney has repeated since being elected.

The BCC said the upcoming federal budget should be part of a “broader growth strategy” that focused on obtaining private enterprise and capital, which would not require government spending.

During the last federal election, Carney’s platform projected there would be a deficit of $62.3 billion in the 2025–2026 financial year, which was $20 billion more than the last official projection in the Fall Economic Statement of 2024.

The interim Parliamentary Budget Officer recently projected that the federal deficit could reach $68.5 billion this year, which is up from an estimated $51.7 billion last year. Jason Jacques also told the government operations committee on Sept. 25 that “everybody should be concerned” with the looming deficit.

The BCC recommends that the government set out a “credible path” for reducing deficits, with a goal of halving this year’s deficit within three years. It also suggests keeping spending growth below nominal GDP growth, while matching spending increases with “permanent savings or an identified revenue source.”

The BCC also suggested the government adopt two fiscal anchors of a declining debt-to-GDP ratio and stable or falling interest-to-revenue burden. Jacques also previously raised concerns with the Liberal government appearing to not have kept the previous fiscal anchors of keeping Canada’s annual deficit at 1 percent of GDP, as well as maintaining a declining debt-to-GDP ratio.

Liberal Finance Minister François-Philippe Champagne has said the upcoming budget, to be introduced on Nov. 4, will be a “generational investment” in the country’s future, and will protect communities, empower Canadians, and make Canada the strongest country in the G7. He added that Ottawa would be “rigorous in our expenses so we can be ambitious in our investments,” and would “spend less so you have more capital to invest.”