Canada’s PM Mark Carney faces autumn challenges as economy falters

Canadian Prime Minister Mark Carney returns to parliament this autumn facing mounting political and economic pressures. From a trade war with the United States to a faltering domestic economy, Carney’s Liberal government is under scrutiny as voters wait to see whether lofty campaign promises translate into tangible results.

Carney swept to office in April amid anxiety over Donald Trump’s presidency, pledging to make Canada’s economy the strongest in the G7, accelerate infrastructure projects, and expand housing development. Now, according to pollster Sébastien Dallaire, as quoted by BBC, Canadians “will be looking for clear actions that make a difference, and that’s where the rubber will really hit the road for Mark Carney.”

The prime minister has begun outlining key initiatives. Ottawa unveiled a first round of “nation-building” projects for fast-track approvals, including doubling liquefied natural gas (LNG) production in British Columbia, expanding Montreal’s port, and building a small modular nuclear reactor in Ontario. Carney also announced $13 billion (£6.9 billion, $9.4 billion) for a new housing agency and pledged to diversify trade away from reliance on the US.

But analysts warn that Carney has raised expectations to risky levels.

“Mr Carney has taken quite a different tack, where he has really set the bar very high in terms of expectations,” said Marci Surkes of Compass Rose, a former adviser to Justin Trudeau. “There’s already impatience from those who are waiting to see results.”

The economic outlook adds further strain. Canada’s unemployment rate rose to 7.1% in August, the highest since 2016 outside the pandemic, while GDP shrank by 1.6% over the summer. An Abacus Data poll found six in 10 Canadians believe the government is too focused on Trump at the expense of housing, healthcare, and affordability.

Trump’s tariffs on steel and autos have damaged parts of the economy, though most Canadian goods remain exempt under the US-Mexico-Canada trade deal. Dallaire noted: “The question has turned to: ‘OK, what now?’”

Meanwhile, Carney faces a revived opposition. Conservative leader Pierre Poilievre, who lost his long-held seat in April but won a by-election in Alberta this summer, is back in parliament. Positioning himself as Carney’s chief rival, Poilievre warned in an open letter: “So far, you have been judged only by the lofty things you have promised to do one day, not by what you have done.” He has sharpened attacks on cost-of-living, crime, and immigration, including the rise in temporary foreign workers.

A key moment will be Carney’s autumn budget, which he calls one of “austerity and investment.” He has demanded spending cuts of up to 15% across departments while still promising major defence increases to satisfy NATO allies. Surkes warned officials may soon be “shaking every couch cushion loose for change.”

His “nation-building” agenda also faces criticism. Indigenous leaders argue fast-track approvals could sideline community consultation, while environmentalists warn LNG and fossil fuel projects tie Canada “to the polluting past.” Public sector resistance to austerity could further complicate delivery.

As Surkes summed up: “Here we have a circumstance where the government is trying to walk and chew gum at the same time—where it is both trying to identify cuts and restraint, but also has committed publicly to some very significant investments.”

By Sabina Mammadli