NATO 5% pledge to add $63B to deficit by 2035, budget watchdog says

By Canadian Press on February 5, 2026.

OTTAWA — The parliamentary spending watchdog says Prime Minister Mark Carney’s plan to spend the equivalent of five per cent of GDP on defence by 2035 will push the federal budget deficit up by $63 billion in 2035.

A report by Parliamentary Budget Officer Jason Jacques estimates that gradually ramping up core defence spending to meet the new target will cost the country roughly an extra $33.5 billion a year.

NATO members committed to the steep new five per cent target last year in response to pressure from U.S. President Donald Trump to hike military spending across the alliance.

The Carney government’s first federal budget, released in the fall, vowed to “put Canada on a pathway” to meeting the latest NATO spending target.

But Jacques’ report criticizes the government for not publishing any supporting data for its projections.

The PBO’s estimates suggest ramping up spending over the coming decade to hit the target will push up the federal debt-to-GDP ratio by 6.3 percentage points in 2035.

This report by The Canadian Press was first published Feb. 5, 2026.

Kyle Duggan, The Canadian Press