Ontario: Fall Economic Statement 2025

Highlights

• The Government of Ontario erred on the side of caution in its Fall Economic Statement 2025 (FES 2025), keeping the outlook for the deficit broadly in line with its Budget 2025 projection (graph 1).
• The prudent economic forecast for Ontario was a big part of what kept the deficit track broadly unchanged. Despite a material improvement in revenues in the 2024–25 fiscal year (FY25), much of this was not passed on to future years as the outlook for real GDP growth was revised lower and nominal GDP was broadly unchanged. That said, the Ontario government managed to find room for some additional modest tax relief in FES 2025, notably for first-time homebuyers of newly built homes and for manufacturers.
• New spending measures were also modest in FES 2025, with new program expenditures largely offsetting the conservative windfall in revenues.
• With the deficit outlook having slightly improved, the net debt-to-GDP ratio was revised lower since Budget 2025, as was net interest-to-operating revenue. This should come as positive news to ratings agencies and investors alike.
• At the same time, total funding requirements have increased relative to Budget 2025 by $4.3B over the three fiscal year starting in FY26. However, much of this is directed toward short-term borrowing to take advantage of falling short-term interest rates. Long-term borrowing is expected to increase by a more modest $0.8B over the same period.