B.C.’s Deficit Hits Record as Debt Set to Surge by 37%

B.C. Faces Record Budget Deficit Amid Soaring Debt and Slower Growth

British Columbia is facing unprecedented fiscal pressure as the provincial deficit reaches a historic high of $11.6 billion for the first quarter of the 2025-26 fiscal year. The province’s debt is expected to climb from $155.3 billion this year to nearly $213 billion by 2028—a projected 37% increase over two years.

Finance Minister Brenda Bailey described the new figures as “very, very concerning,” citing the elimination of the carbon tax and rising trade uncertainties as key contributors. To counter this, the government plans to drive revenue through economic development—particularly in mining—and conduct a careful review of government spending, while safeguarding essential services.

The province is on course to meet its target of $1.5 billion in savings over the next three years, including $300 million in the current year. Bailey also hinted at upcoming reforms within the public sector to further reduce costs.

Meanwhile, members of the B.C. General Employees’ Union (BCGEU), currently in their third week of strike action, are demanding an 8.25% wage hike over two years. Union president Paul Finch stated that the deficit would not change their negotiation stance, arguing that public workers are not responsible for the province’s fiscal challenges.

The budget report does acknowledge some support from a tobacco company settlement. B.C. expects $3.7 billion over 18 years, with $2.7 billion already accounted for in the current fiscal plan—a move critics like Peter Milobar, B.C. Conservative finance critic, see as masking the true extent of the province’s financial troubles.

Additional economic indicators have also weakened. GDP growth forecasts for 2025 and 2026 have been revised downward, to 1.5% and 1.3% respectively. June 2025 exports declined by 0.6% year-over-year, while home sales, new housing starts, and population growth have also slowed.

Despite these challenges, Bailey emphasized that B.C.’s debt-to-GDP ratio remains relatively strong at 24.5%—well below Ontario and Quebec’s 40% range. Still, voices from the Greater Vancouver Board of Trade warn that the province is veering off a sustainable financial path and call for bold economic reforms to lower costs, accelerate construction, and create new market opportunities.