This piece, by Jock Finlayson, ICBA Chief Economist, and Ken Peacock, Consulting Economist, first appeared in Business in Vancouver on January 23, 2026.
The Eby government will soon bring down another budget, providing an updated look at the province’s finances and the state of our economy. At this point it’s a safe bet the picture won’t be flattering. The stunning deterioration in B.C.’s fiscal health during Premier Eby’s tenure will not soon be reversed. Indeed, according to the Ministry of Finance, the aggregate provincial debt is set to more than double on Eby’s watch, soaring from $89 billion in 2022-23 to an estimated $213 billion by 2027-28. Many British Columbians may wonder about the benefits produced by this fast-climbing mountain of government debt.
The forthcoming budget will be a test of whether a government struggling with its core responsibilities understands the scale of the problems facing the province – and whether it has the capability and the will to tackle them.
So far, there is little evidence that Premier Eby and his ministers are up to the task. This government has yet to outline a credible and convincing strategy either to galvanize a visibly limping economy or to put B.C.’s finances on a sustainable footing.
Halfway through the 2025-26 fiscal year, the operating deficit is on track to reach $11.2 billion—$300 million more than assumed in last year’s budget. More troubling, in our view, is that the underlying “structural deficit” is even larger than the reported top-line number.
What explains this hefty “structural deficit?” First and most straightforwardly, there is now a sizable, ongoing gap between spending commitments and revenue streams. Second, the government decided to book $2.7 billion in revenues from a legal settlement with tobacco companies as a one-time windfall. A more appropriate accounting treatment would spread this sum over several years. Future deficits will be larger because of the way the tobacco settlement money has been counted. Finally, the generous four-year settlement recently inked with the main public service union signals strong upward pressure on provincial compensation costs going forward, as the parameters of that agreement are replicated across the province’s sprawling public sector.
On present form, Premier Eby bids fair to go down as the worst fiscal manager in B.C.’s history. He inherited a balanced budget and a moderate accumulated debt from his more prudent predecessor, John Horgan. Within a couple of years, his government’s reckless spending had pushed the operating deficit to record highs—now the biggest in the country relative to the size of the economy. At the same time, provincial capital spending was also ramped up, adding to the government’s borrowing binge. Once the envy of other provinces, B.C.’s credit rating has been downgraded multiple times since 2021, boosting annual debt-servicing costs and leaving policymakers with diminished scope to deal with future economic shocks.
Perhaps the government is praying that a revival of economic growth will somehow materialize, thereby improving the fiscal outlook via higher tax revenues. That hope looks misplaced. British Columbia’s economy is stagnating, in part due to the cumulative impact of past and present NDP policy choices. In 2024, B.C. posted real economic growth of just 1.1 per cent, the lowest in the country. Last year was only a little better. The consensus outlook is for growth this year to tick a bit higher, to around 1.4 per cent. Put simply, the province’s economic engine has been hovering near stall speed for some time.
Unfortunately, B.C. has become known as a jurisdiction with high taxes on both capital and the most productive segments of the work force; a punitive approach to regulation; and mounting uncertainty about future policy directions, property rights, Indigenous claims, runaway government spending, and much else besides. This unappetizing mix is making many businesses reluctant to invest or to expand their footprint here. Not all of this can be laid at the current government’s doorstep, but some of it definitely can.
In the meantime, a key driver of B.C.’s economic growth since 2020 has completely disappeared: robust population gains. Amid sweeping changes in federal immigration policy, B.C’s population is now falling. Young people are leaving the province in record numbers, residential construction is in recession, forestry and manufacturing are shrinking, and capital investment is weak across most sectors.
Despite the government’s talk about fast-tracking a handful of politically favoured projects, few of these are likely to break ground anytime soon -- and all face legal risks. In any case, big projects alone will not rescue B.C.’s sputtering economy or quickly fill the province’s deep financial hole.
Without a credible plan to restore fiscal discipline, bolster business and investor confidence, and revive GDP growth, British Columbia risks drifting from a top-tier province to an economic also-ran.