Scotiabank Notes New Brunswick's Mid-Year Provincial Fiscal Update Points to A Higher Projected Deficit

10:26 AM EST, 11/19/2025 (MT Newswires) -- New Brunswick released its mid-year economic and fiscal update, with a projected FY26 deficit of $836 million, or 1.7% of gross domestic product, compared with $549 million, or 1.1% GDP, in the Budget, said Scotiabank.

No new policy measures were announced by the Canadian province.

A lower revenue forecast drove most of the increase in the FY26 deficit, stated the bank. Corporate and personal income taxes, as well as various other categories, are now expected to be lower than forecast in the budget, such that essentially no growth in total revenues is now expected year-over-year.

New Brunswick's nominal GDP level -- in other worsd, the tax base -- was recently revised lower by Statistics Canada. In addition, the assumed nominal growth rate for 2025 has been revised down to 3.1% compared with 3.2% in the Spring budget.

Higher spending is responsible for about a third of the increase in the projected deficit, pointed out the bank. Increased projected spending by the health and social development departments has led overall projected expenses higher, despite lower spending by some other departments. Overall, expenses are projected to be 5.5% higher than the previous fiscal year.

Net debt is projected to rise, added Scotiabank. Based on the published government forecast for GDP, which pre-dated the recent economic revisions, net debt is expected to rise from 25.0% in FY25 to 26.8% in FY26.

However, the bank's calculations indicate that the recent GDP revisions will increase the FY25 figure to 25.4%. Despite the projected increase, New Brunswick's public debt burden remains lower than most other provinces in Canada.

Medium-term fiscal risks appear tilted to the downside, according to Scotiabank. While the worst-case scenarios for the United States tariff war seem to have been avoided, the province is facing slowing growth on top of the downward revisions to the size of the provincial economy.

In addition, the provincial government is facing spending pressures from health and social services, and the finance minister has signalled that a new compensation deal for physicians could increase projected spending further before the end of the year.

More moderate spending growth, alongside a pickup in revenues, will be needed to achieve the declining deficit path set out in the Spring budget, concluded the bank.

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