Ontario Budget 2025: Deficit Jumps to $14.6B Amid $200B Investment Blitz and U.S. Trade Threats

Ontario is bracing for a larger-than-expected deficit of $14.6 billion in 2025-26, as Premier Doug Ford’s government doubles down on economic stimulus, skills development, and infrastructure investments to counter the economic fallout from potential U.S. tariffs.

Finance Minister Peter Bethlenfalvy unveiled the provincial budget Thursday, outlining a massive $200 billion infrastructure commitment over the next decade, alongside targeted spending to protect industries, boost employment, and future-proof the economy.

“We are at a pivotal moment,” said Bethlenfalvy. “These are investments that safeguard our economy and position Ontario for long-term growth.”

A key feature of the budget is a $5 billion allocation to the “Protecting Ontario Account,” designed to help businesses weather disruptions linked to trade tensions with the United States.

The province is also injecting $1 billion more into the Skills Development Fund over the next three years, aiming to retrain workers for evolving industries. Meanwhile, a newly established $500 million Critical Minerals Fund is set to accelerate resource development in northern Ontario, particularly in minerals needed for electric vehicle and battery production.

Bethlenfalvy called recent U.S. tariff threats “a wake-up call,” but framed Ontario’s response as one of resilience rather than retreat.

The budget includes a staggering $200 billion commitment over ten years for infrastructure, with $33 billion planned for 2025-26 alone. The breakdown includes:

• $61 billion for public transit (GO Expansion and subway projects),

• $56 billion for healthcare infrastructure,

• $30 billion for highway construction and rehabilitation, and

• $30 billion for education and childcare capital projects.

The province is also extending the Ontario Made Manufacturing Investment Tax Credit, which will funnel $1.3 billion into the sector over the next three years.

To support cash flow for businesses, Ontario will continue with a six-month deferral of various taxes, valued at $9 billion.

Despite aggressive spending, the government remains optimistic about returning to balance by 2027-28, with a projected $200 million surplus that year. However, the 2026-27 forecast has also shifted—from a $500 million surplus to a $7.8 billion deficit.

Ontario’s GDP growth is expected to slow significantly due to tariff concerns. After a 1.5% increase in 2024, growth is forecast at just 0.8% in 2025, rising modestly to 1% in 2026 and 1.9% in 2027.

Health care spending will reach $91.1 billion, up from $89.3 billion last year—an increase that falls short of inflation. The government attributes the modest growth to elevated pandemic-related costs in previous years and ongoing pressures from population growth.

The budget includes $235 million to expand 305 primary care teams and introduces a fertility tax credit covering 25% of treatment costs, up to $5,000 annually.

Education funding also inches up by $1 billion to $39.4 billion, though spending is expected to remain flat over the next two years.

Ontario NDP Leader Marit Stiles dismissed the budget as “a missed opportunity,” arguing it prioritizes alcohol pricing over pressing needs like child care and post-secondary education.

Additional measures include:

• $75.5 million in homelessness prevention funding,

• $57 million for police helicopters in Niagara and Windsor,

• and regulatory changes such as lifting blacked-out windows for cannabis retailers and introducing an “Ontario Grown” label for local cannabis products.

While the Ford government insists the spending is necessary to shield Ontario from economic uncertainty, critics warn the ballooning deficit and flatlined social sector investments could leave the province more vulnerable in the long run.