Just like socialist governments In the UK and France, Canada is hurtling towards a debt crisis – courtesy of its ‘go woke, go broke’ policies!

Tariff tit for tat favours Canada does Trump know???

Of interest:

“The U.S. collected an estimated $12–15 billion in tariff revenue from Canadian imports between January and July 2025, while Canada collected approximately $20.7 billion USD in retaliatory tariffs on U.S. goods.

From here:( h/t ©The Daily Digest)

The cost of borrowing: Canada’s debt crossroads

“Canada has one of the most advanced economies in the world. However, the country is also one of the most indebted nations on the planet, and according to one expert, that debt will become a serious problem for Canadians.

On February 2nd, The Hub published a report from Charles Lamman, an economic and policy expert, that outlined the serious problems Canada is facing when it comes to the level of debt the country has accumulated across all of its sectors.

Data from the International Monetary Fund

Lamman pointed to data from the International Monetary Fund (IMF) that found Canada was the fourth most indebted nation among 34 other advanced economies. But Canada’s debt problem was worse than it seemed.

One of the most indebted nations in the world

According to the IMF data, Canada’s aggregate household, corporate, and government debt has reached 377% of the nation’s total Gross Domestic Product (GDP). That level of debt was only surpassed by France, Japan, and Luxembourg.

Canada’s debt levels will become a big problem

Canada may not have been ranked the worst debt offender in the data, but the level of debt the country has is problematic because, unlike other countries, that debt is spread evenly across sectors in ways that are bad for the future.

Households are living beyond their means

Lamman noted that Canadian households now carry debt equal to 103% of GDP. This was the second-highest number among the 34 other economies included in the IMF data. Canada was only beaten out of first place by Switzerland.

Looking at average household debt across nations

Canadian household debt levels may not sound bad, but the average level of household debt measured across all 34 countries was just 58%. This means that Canadians have borrowed nearly twice as much as other relative economies.

Worse than the US and UK

“Even the United States, often criticized for consumer profligacy, carries household debt of only 71 percent of GDP,” Lamman explained. “The United Kingdom, at 81 percent, is the only other G7 economy in our stratosphere. Our household debt exceeds that of financial crisis-scarred Greece by more than double.”

Canadian corporations are also overleveraged

Canadian corporations are facing a similar problem. Non-financial corporations carry debt equal to 163% of GDP, again placing Canada in the top tier of indebted nations. Canada’s debt level exceeds that of the US at 145% and Germany at 113% despite having a much smaller industrial base than either country.

The corporate debt issue is a big problem

This is an issue for a resource-dependent economy like Canada. It creates an “acute vulnerability to commodity price swings and global demand shifts,” Lamman noted.

In the top-tier of highly indebted governments

Canadian government debt is also in the top tier of indebted nations, with the combined amount of federal, provincial, and local government debt equal to 111% of the country’s GDP. Just the US, France, Italy, Greece, and Japan perform worse on this metric.

Canadian governments carry a lot of debt

“We carry more government debt than the United Kingdom (101 percent) and far more than Germany (64 percent),” Lamman reported. “Our level also exceeds the 34-country average of 72 percent.”

A dramatic shift from the pre-2008 era

“This represents a dramatic shift. Before the 2008 financial crisis, Canada’s gross government debt stood at just 67 percent of GDP—a fraction of the level today. We’ve squandered much of the fiscal advantage we once held,” Lamman added.

Why do these debt problems matter?

With Canada carrying a total debt load equal to 377% of GDP, the country is facing a few unique problems. With households, corporations, and governments so highly leveraged, the debt problem could change how the economy can respond to a crisis because the entire system is more fragile than it appears.

Can Canada respond to an unexpected crisis?

An unexpected rise in interest rates can lead households to cut spending to service their debt, cause businesses to postpone investment or hiring, and lead many governments to increase spending to support their populations or turn to austerity when citizens need new spending the most.

The problem played out after Covid

Lamman noted that the latter situation is exactly what happened during the 2022-2023 interest rate hiking cycle. However, fragility problems aren’t the only issues that the current debt level problems in Canada could lead to in the future.

Canada has deeper structural issues

The debt levels revealed by the IMF revealed that Canada has “deeper structural issues about how we allocate capital.” This matters since misallocated capital compounds over time. Every dollar used to inflate housing prices or not invested by companies only slows productivity growth and ultimately hurts everyone.

Government policy could be constrained

Finally, Canada’s debt burden will constrain the policy options that governments can use to address future economic crises. “What happens when the next recession or external shock arrives?” Lamman questioned.

“Policymakers face difficult trade-offs”

“A cooling housing market reduces asset values. Tariffs raise costs. Either scenario could trigger defaults and financial instability when leverage is this high. Our debt burden has effectively narrowed the range of feasible approaches,” Lamman added.

Canadians can address the problem

However, not all is lost. Lamman noted that if we understand the problems that Canada is facing, the country can address them. Canada isn’t facing an imminent debt crisis yet, but the options to deal with the debt issues the country currently has are slowly closing as people, companies, and governments choose to borrow more for consumption rather than for investment.”

From Brave AI:

“Canada’s fiscal deficit for the first eight months of the 2025/26 fiscal year (April to November 2025) was C$26.39 billion, according to the most recent data from the finance ministry, released on January 30, 2026.

“TD Economics and the Parliamentary Budget Officer (PBO) report that the deficit is now expected to rise to 2.5% of GDP in 2025-26, equivalent to approximately $64.3 billion, due to higher-than-expected spending and revised economic forecasts.”

“ This represents a substantial increase from the original FES projection and is the highest deficit outside of a recession since 1995-96.”

“The increase is primarily driven by:

• $65 billion in additional spending over the next five years, with $16.8 billion attributed to 2025-26 alone.

• A major revision in accounting for contingent liabilities, particularly related to Indigenous claims against the Crown.

• Weaker economic growth than previously forecast, with real GDP growth downgraded by 0.8 percentage points for 2025 and 0.9 percentage points for 2026.

“Based on the provided search context, the forecast for Canada’s nominal GDP in 2027 is $2.309 trillion USD. This projection comes from Trading Economics’ global macro models and analysts’ expectations, which anticipate Canada’s GDP will trend around $2.309 trillion USD in 2027 and $2.351 trillion USD in 2028.

Onwards!!!

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