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British Columbia budget

British Columbia: Budget 2025 - A Prudent Plan for a Turbulent Time

March 5, 2025
Laura Gu, Senior Economist • Kari Norman, Economist

British Columbia’s fiscal year 2025–26 (FY2026) budget reveals deeper-than-anticipated deficits under prudent assumptions, while preparing for strong fiscal headwinds blowing from south of the border. The provincial government is now projecting a $10.9B deficit in FY2026 which gradually narrows to $9.9B in FY2028.

The updated fiscal plan is characteristically prudent, as the province continues to embed ample buffers through contingencies and conservative assumptions.

The government's estimated downside risks from new US tariffs, which could result in additional annual shortfalls ranging from $1.7B to $3.4B due to pervasive job losses and reduced corporate profits, appear reasonable.

Amid the financial strains caused by US tariffs, the province has managed to control spending by keeping new policy measures light and targeted.

Larger projected deficits are expected to push the debt-to-GDP ratio higher from 22.9% in FY2025 to 34.4% in FY2028. Gross borrowing requirements are now expected to total $31.1B in FY2026, $33.1B in FY2027, and $34.7B in FY2028. For FY2026 and FY2027, the updated borrowing requirements represent a total increase of $6.2B from last year’s budget.

In light of a weaker revenue outlook and significant tariff impacts, BC’s Budget 2025 balances critical investments with a relatively manageable debt position, even as the province's debt is expected to rise as a share of the economy. By keeping program spending increases incremental and targeted, despite strong revenue headwinds from external factors, the budget is a step in the right direction, paving the way for further consolidation in future plans.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.