Over the past decade, Canada’s financial health has taken a worrying turn — and the latest Fraser Institute study should serve as a wake-up call for policymakers and citizens alike. According to the report, The Deterioration of Canada’s Finances Internationally, our country has seen one of the largest increases in both government spending and debt among advanced economies. And the consequences? Lower growth, heavier tax burdens, and a bleak financial future for the next generation of Canadians.
Let’s be clear — government spending is not inherently bad. In fact, strategic investments can stimulate economic growth and improve living standards. But when spending continuously outpaces growth, and debt balloons faster than income, we begin to drift into dangerous territory. That’s exactly what has happened in Canada.
Since 2014, government spending in Canada has jumped from 38.4% of GDP to 44.7% in 2024. This isn’t just a small uptick — it’s the second-largest increase among 40 advanced economies, and the highest within the G7. Only Estonia saw a bigger spike. Meanwhile, our total government debt exploded by over 25 percentage points, placing us near the top of the global debt rankings and giving us the dubious distinction of having the highest increase in the G7.
Some might point to the pandemic as justification — and yes, many governments borrowed heavily to fund emergency programs in 2020. But Canada borrowed more than anyone else relative to the size of its economy. In just that one year, our debt burden surged by nearly 28 percentage points. That’s not a small bump; that’s a debt tsunami.
What’s most concerning is that while other countries have started to rein in their debt post-pandemic, Canada continues to lean on borrowing. Germany, for instance, actually reduced its debt burden by over 10 percentage points over the last decade. Meanwhile, we’ve climbed to a gross debt level of 110.8% of GDP, making us the seventh most indebted nation among our peers.
And this isn’t just a numbers game — it has real-world consequences. The more we spend on debt interest, the less we have for healthcare, infrastructure, and education. Rising debt also means higher taxes down the line, especially for younger Canadians who will be forced to pick up the tab for today’s spending habits.
Fiscal responsibility isn’t just a conservative buzzword; it’s a fundamental requirement for long-term economic stability. Canada’s current trajectory is unsustainable. If we continue to prioritize short-term political wins over long-term financial health, we’ll find ourselves stuck in a cycle of slow growth, high taxes, and reduced quality of life.
It’s time for a serious, non-partisan discussion about spending, debt, and the future of our economy. The numbers don’t lie — and if we ignore them, it’s future generations who will pay the price.
