2026 - 2030 Surrey Financial Plan

ECONOMIC OVERVIEW

this year. The deadline to extend the agreement for another ten years is July 1, 2026. Prime Minister Carney has stated that Canada will continue negotiations to renew CUSMA, while also pursuing diversification of its trade relationships as quickly as possible, citing reliance on the US as a key economic risk. If CUSMA is not renewed by the deadline, the agreement will move to annual reviews for the remainder of its term. This outcome could increase uncertainty and further dampen business investment. The federal government’s spring economic update revealed a lower-than-forecasted deficit for the 2025/2026 fiscal year, coming in at $66.9 billion compared to a projected $78.3 billion for the year. Surging oil prices provided an uplift to the government’s revenues. $37.5 billion of newly announced measures include skilled trades recruitment and hiring, reduced Canada Pension Plan (”CPP”) rates, addressing the backlog of air passenger complaints, new funding for sports facilities and programs, and a ban on cryptocurrency ATM machines. BRITISH COLUMBIA The British Columbia ("BC") economy is forecasted to grow by 1.3% this year, reflecting ongoing trade uncertainties with the US. Federal caps on temporary residents are expected to slow population growth in BC, which will further reduce housing demand. Elevated interest rates and high housing prices continue to dampen housing activity, with spillover effects on construction and related sectors. The BC Real Estate Association ("BCREA") reported continued weakness in the housing market, with home sales in March 2026 declining by 3.6% year-over-year. BC’s unemployment rate rose to 6.7%, the highest level since the pandemic. The provincial economy lost 19,000 jobs in March of this year, following a decline of 20,000 jobs in February. BC’s CPI increased to 2.5% year-over-year in March, up 0.8% from the prior month, largely driven by higher gasoline prices. Inflation is expected to rise in the coming months, which may dampen business investment and hiring. Higher unemployment is also expected to reduce consumer spending. Effective October 1st of this year, the provincial government will expand the Provincial Sales Tax ("PST") base to include select professional services that were previously exempt. Affected services include accounting, architectural, engineering, real estate, and security services. Business leaders have raised concerns that the requirement to collect and remit PST will increase administrative burdens and raise input costs, as PST is not eligible for input tax credits. These additional costs may ultimately contribute to higher housing prices for British Columbians. The government is also increasing the personal income tax rate on the lowest income bracket from 5.06% to 5.60%, which is expected to generate approximately $1.1 billion in additional revenue. A further $1 billion is projected to be raised by pausing income tax bracket indexation from 2027 to 2030. Critics argue that suspending indexation effectively increases taxes indirectly, as rising incomes, driven in part by inflation, push taxpayers into higher tax brackets without corresponding adjustments. This results in individuals being taxed on nominal income gains rather than real increases in purchasing power.

City of Surrey | 2026—2030 Financial Plan | Financial Overview

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