Canada’s economy has put in a weaker-than-expected performance since the federal Liberals tabled their first budget this spring, and that means budget deficits will be larger than forecast, economists at TD Bank say. The budget hole will be $5 billion bigger than predicted for the current 2016-2017 fiscal year, rising to $34 billion, wrote economists Derek Burleton, Beata Caranci and Brian DePratto in a new report.

Prime Minister Justin Trudeau and Finance Minister Bill Morneau speak to media during a post-budget press conference in Ottawa in March. (Photo: Jake Wright/Canadian Press) Deficits will be larger over the next five years as well, with an additional $16.5 billion in debt accumulated over that time — on top of the nearly $120 billion in deficits forecast over the next six years. They noted that the federal government built a deficit “cushion” into the budget in case of unforeseen events, but “this allotted cushion is poised to be absorbed, and then some.” “Canada is ... likely to remain in an enviable fiscal position." — TD Economics ​ But it’s not all bad news: long-term interest rates have fallen since the spring budget, and that means the government will pay lower debt servicing costs. So despite the added spending, Canada’s public debt as a share of the economy will remain the same as it is today — some 31 to 32 per cent of GDP.