TORONTO – Ontario’s deficit projection is shrinking in its fall fiscal update, but so are the province’s expectations for the labour market as U.S. tariffs are expected to continue hitting the economy.
The government projected in its spring budget that this year’s deficit would be $14.6 billion, but Ontario now expects to end the year $13.5 billion in the red.
Finance Minister Peter Bethlenfalvy’s fall economic statement tabled Thursday still has the province planning to balance the books in 2027-28 — the same year an official said the net debt would top half a trillion dollars.
“These trying times demand we maintain a steady fiscal hand and work to restore balance,” Bethlenfalvy said in the legislature. “They demand we protect our workers, businesses and national industries from uncertainty. They demand we build projects worthy of a nation whose economic strength is matched only by the strength of its people.”
The fiscal update contains few new investments, though the province is enhancing and expanding a manufacturing investment tax credit and adding $100 million to a fund that helps small- and medium-sized businesses diversify into new markets.
The remaining $4 billion from a $5-billion Protecting Ontario Account the government established this year to support sectors affected by U.S. tariffs has not yet been allocated, but the government said it is working on the next funding streams.
Economic headwinds in the near term are pushing the province’s expectations for real GDP growth to 0.8 and 0.9 per cent this year and next, sharply down from last year’s 1.8 per cent.
The average unemployment rate is expected to rise by nearly a full percentage point to 7.8 per cent this year. The rate is projected to decline in the following years, but is expected to still sit higher than what was projected this spring in the budget.
“Slowing economic activity and lower population growth due to changes in federal immigration policy are projected to contribute to a softening in Ontario labour market activity and easing employment growth,” the government wrote in the fiscal update.
Employment rose 0.7 per cent in the first quarter of this year but declined by 0.5 per cent in the second quarter. It is projected to slow further to 0.4 per cent next year “as economic growth continues to be impacted by ongoing trade conflicts and the effect of the associated uncertainty on investment and hiring,” the government wrote.
Liberal finance critic Stephanie Bowman said the fiscal update fails to meet the moment due to a lack of new spending to protect jobs, and the economic challenges are at least in part the government’s own making.
“The government side comes to this house each and every day blaming U.S. tariffs for all the woes in Ontario when in fact unemployment has been rising for nine quarters under this government,” she said in the legislature.
“That’s about seven quarters before U.S. tariffs.”
The NDP said the fall economic statement fails to deliver for working people, with high unemployment and low housing starts.
“Ford’s fall economic statement lacks ambition,” critic Jessica Bell wrote in a statement. “No jobs plan to address the 7.8 per cent unemployment rate and the one in five young people without a job, and they have thrown in the towel on building homes.”
In the spring budget, the province expected to see 71,800 homes built this year — already far off the pace needed to reach 1.5 million — but now it projects an even lower 64,300 and expects that annual figure won’t crack 80,000 until 2028.
Ontario’s contingency fund will now sit at $4.5 billion, after a $2-billion top-up through the fall economic statement, and the reserve is at $2 billion.
Through the fiscal update, the government said it is exploring some changes to pensions and rideshare rules.
Ontario is developing a legislative framework for a new pension option called a variable life benefit, through which monthly pension payments would be adjusted based on the fund’s investment performance and how many other living members are in the fund.
The province is also looking to consult on standardizing rideshare guidelines across Ontario, as rules such as application fees and driver screening requirements can vary by municipality.
Bethlenfalvy had already announced a few fall economic statement measures before the big day, including an HST rebate for some first-time homebuyers and $1.1 billion for home care.
As well, changes to election rules including scrapping fixed election dates and raising the political donation limit to $5,000 are in the economic statement bill, as are changes to a climate law that would mean the province no longer has to set greenhouse gas emission reduction targets or prepare a climate change plan.
This report by The Canadian Press was first published Nov. 6, 2025.
