B.C. Fiscal Update: Deficit soars as economic growth slows

September 15, 2025

RED FM News Desk

British Columbia’s deficit has reached a record high, projected at nearly $11.6 billion for the first quarter of the 2025-2026 fiscal year. According to Finance Minister Brenda Bailey, the significant increase is largely a result of the government’s decision to eliminate the carbon tax and ongoing “global trade uncertainty.”

Bailey’s latest fiscal update shows that economic growth is also expected to slow down. The gross domestic product (GDP) growth rate has been revised downward to 1.5% for 2025 (from 1.8%) and 1.3% for 2026 (from 1.9%). The province’s total debt is projected to increase by almost $60 billion over the next two fiscal years, reaching more than $212 billion by 2027-2028.

The new deficit forecast is $665 million higher than the original budget projection. Looking ahead, deficits are expected to be $12.6 billion in 2026-2027 and $12.3 billion in 2027-2028.

Bailey acknowledged the economic challenges facing B.C., stating, “While B.C.’s diversified economy is better positioned than many to weather these headwinds, there’s no doubt that tariffs are challenging our economy and there is pressure on our fiscal position.”

The financial update attributes the higher deficit to various factors, including the carbon tax elimination and a decrease in revenues from sources like property transfer tax, sales tax, and natural resources. The province has also incurred higher fire management costs.

However, the deficit has been partially offset by an increase in corporate income tax revenues and B.C.’s share of the $32.5 billion lawsuit settlement against tobacco companies.

Bailey confirmed that the government is on track to meet its three-year, $1.5 billion expenditure-management target, with over $300 million in savings this fiscal year. “We’ve made a commitment to review every dollar being spent to make sure it’s serving the needs of British Columbians,” she said. “In the current fiscal and economic climate, we’re focusing on the key services that people and families need.”