**Economist Predicts $100 Billion Deficit in Upcoming Federal Budget** Stéfane Marion, chief economist at National Bank Financial, is optimistic about Canada's upcoming federal budget, despite predicting a deficit of $100 billion. Marion has been critical of what he describes as "Made in Canada sub-optimal policies" that have contributed to a "lost decade" for the economy. In a series of research notes, he has outlined the consequences of federal government policies, including stagnating GDP per capita, capital stock levels in manufacturing that have not improved since the negotiation of NAFTA in 1990, and an increase in regulations affecting businesses. Currently, there are 320,000 regulations impacting companies, with 110,000 specifically in the manufacturing sector. Additionally, factory output has declined even as the population has grown by 30 percent. Marion emphasized that Canada has fallen out of the top 20 in international competitiveness, dropping from the fifth position, making it the only G7 country not in that ranking. He stated, "We talk about a Canadian productivity problem but really we have an investment problem. There is no precedent for investment stagnation for a decade." Despite these challenges, Marion is hopeful about his campaign, "Make Canada Investable Again." He expressed optimism about the economic outlook, particularly following the Carney government’s throne speech in April, which promised to position Canada as a leading G7 economy and an energy superpower. The government also aims to innovate immigration policy and reduce regulations. Marion described this shift as a significant departure from the previous decade. He noted that the Carney government has committed to investing five percent of GDP in defense by 2035, which he believes will enhance Canada’s relationship with Washington and act as a "multiplier" for economic growth. He urged Canada to leverage its advantages, such as affordable and clean electricity and natural gas prices that are half of those in the U.S., to participate in North America's re-industrialization. Marion labeled the upcoming budget as the most consequential in a generation. His forecast of a $100 billion deficit exceeds the $70 billion consensus and is more than double the $42 billion the government projected last December. Marion's prediction is informed by his experience in the Finance Department. He explained, "When you have a new minister of finance, if you are going to do risk management, you do it in the first year. If there is uncertainty, you make it show this year, so that next year you can deploy policy to improve on that." Marion stressed that the government's actions regarding the deficit are more critical than the deficit's size itself. He cautioned that Prime Minister Mark Carney must not alarm investors who hold 40 percent of the country’s bonds. He posed the question, "How do you convince investors to keep with the Canadian thematic?" He anticipates a stimulative budget that includes significant investment components to reassure investors about the future. While a $100 billion deficit would be shocking, it would represent three percent of GDP, which is half the size of the U.S. deficit, and could stimulate growth in 2026. Marion remarked, "A $70 billion deficit might be too conservative, given the uncertainty. You want to show improvement next year." Marion's positive outlook is echoed by recent stock market performance in Canada, which has risen 20 percent this year, outpacing U.S. equity indices at 13 percent and doubling the increase in European indices, according to market analysis. He noted that the S&P/TSX index is trading at 17 times earnings, a level not seen in a decade, and has narrowed its discount compared to the S&P 500, which trades at 22.4 times earnings. This context highlights the complexities of Canada's economic landscape as it prepares for a pivotal budget announcement.