Canada's Defense Spending on Track for Fastest Growth Since 1997 Despite Broader Spending Restraints: BMO

07:22 AM EST, 11/03/2026 (MT Newswires) -- Canadian defense spending is accelerating, even as the federal government continues to restrain spending in other areas, according to BMO Capital Markets in a note. Real defense spending rose 6.7% annually in August and is on track to grow by more than 7% in 2026, the strongest yearly increase since records began in 1997, wrote BMO in the Monday note. Higher defense spending is supporting public-sector growth, with public administration gross domestic product rising 2.1% over the past year, slightly outpacing overall economic growth, said the bank. Federal non-defense spending, meanwhile, declined 2% annually, after falling nearly 4% in 2025. This reallocation of spending is expected to be a key theme in Thursday's Federal Budget, with cuts to day-to-day operations offsetting higher outlays in priority areas such as defense, said BMO.