Canadian government eyes CAD50 billion defence budget in 2026-27

A Canadian Army ACSV with Multinational Brigade Latvia moves into the field at the start of Exercise OAK RESOLVE on 29 August 2025 at the Adazi Military Base, Latvia. (Canadian Joint Operations Centre)

Canadian Finance Minister François-Philippe Champagne tabled Budget 2026 in the House of Commons on 5 November. The budget projects a top line of CAD50.7 billion to modernise the Canadian Armed Forces (CAF) and progress toward the NATO Defence Investment Pledge to spend at least 3.5% of GDP on core defence programmes and up to 1.5% of GDP on defence- and security-related programmes by 2035.

Budget documents estimate that Canada reached the previous NATO benchmark of 2% of GDP for defence spending in 2025-26 for the first time since the end of the Cold War. Budget 2026 projects reaching combined core defence and defence- and security-related spending of more than 4% of GDP in 2027-28, the documents said.

Investments are intended to modernise equipment, improve and maintain defence infrastructure, support a sustained Arctic presence, and strengthen the defence industrial base, the documents explained.

Procurement projects

Canada needs long-term investments in equipment, infrastructure, and operational readiness to meet the government's military expansion and modernisation goals, the budget documents said, highlighting Budget 2025's CAD81.8 billion investment commitment in the CAF.

The documents point to major procurement decisions in 2026, including a formal agreement with the government of Australia and BAE Systems Australia to procure an Arctic over-the-horizon radar capability; a strategic partnership with General Dynamics Land Systems-Canada, including nearly CAD2 billion for an additional 190 Armoured Combat Support Vehicles (ACSVs); and a non-binding term sheet with Saab in Sweden for a potential acquisition of GlobalEye airborne early warning and control aircraft.