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2026

British Columbia

Financial and Economic

Review

86th Edition

(September 2026)

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Table of Contents

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Part 1

Economic Review¹

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¹ Reflects information available as of June 29, 2026. 

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2025 Overview

Economic activity in British Columbia advanced in 2025, following modest growth in 2024. Last year, lower interest rates and easing inflation supported household spending and new home construction remained steady. Uncertainty amid U.S. tariffs and lower population growth due to federal immigration policy changes tempered labour market activity and home sales, while exports slowed. Overall, B.C.'s diversified economy still continued to grow despite facing notable headwinds last year.

Statistics Canada published 2025 real dollar GDP by industry at basic prices in the preliminary release of its Provincial Economic Accounts in May 2026. The following analysis refers to these real GDP figures, as opposed to the commonly reported income and expenditure market prices data that will only be released by Statistics Canada later in the year.2

B.C.'s real GDP rose by 2.0 per cent in 2025, up from 1.2 per cent growth in 2024. B.C. was one of only two provinces that saw an increase in the rate of real GDP growth from 2024 to 2025.

Last year's economic conditions were shaped by two key developments. First, U.S. tariffs and rising protectionist trade measures increased uncertainty for exporters and investors in trade-related industries. Second, changes to federal immigration and temporary resident policies slowed population growth, easing both labour supply pressures and housing demand.

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² Provincial and national real GDP by industry estimates are based on Statistics Canada's preliminary industry accounts, released in May 2026. Further information on British Columbia's economic performance is expected to be available in November 2026, when Statistics Canada releases revised GDP by industry data for 2025 and previous years, together with the full income and expenditure accounts for 2025. 

Employment in B.C. increased by 1.1 per cent in 2025, adding 32,200 net new jobs, while employee compensation (aggregate economy-wide wages, salaries, and employers' social contributions) rose by 3.1 per cent. The unemployment rate averaged 6.2 per cent in 2025, compared with 5.6 per cent in the prior year, as labour force gains outpaced job creation. Despite the increase, B.C.'s unemployment rate remained below the national average of 6.8 per cent. In 2025, home sales activity was constrained by heightened economic uncertainty and affordability challenges, while housing starts remained above the 10-year historical average.

Price pressures continued to moderate in 2025, reflecting subdued goods inflation and slower price growth for services. Lower gasoline prices, partly due to the removal of the B.C. consumer carbon tax, also helped ease headline inflation. Overall, B.C. consumer price inflation averaged 2.1 per cent in 2025, the lowest rate since 2020. Lower inflation and easing interest rates supported B.C. retail sales in 2025, which increased by 6.4 per cent, despite slower population growth. On the trade front, B.C.'s merchandise exports edged down 0.1 per cent compared to 2024 as markets adjusted to shifting global trade conditions.

British Columbia Economy

B.C.'s real GDP expanded by 2.0 per cent in 2025, following 1.2 per cent growth in 2024. Annual gains were recorded in both the goods-producing and service-producing industries, with the real estate, health care, mining, oil and gas, and construction sectors contributing the most to growth.

Last year, B.C.'s service-producing sector (+1.8 per cent) led overall economic output. Accounting for magnitude, contributions from service sector growth were led by real estate, rental and leasing (+2.2 per cent) and health care and social assistance (+3.5 per cent).

By contrast, the largest declines were reported in administrative and support, waste management and remediation services (-1.4 per cent) and other services (-1.0 per cent). Meanwhile, educational services (-0.1 per cent) declined for the first time since 2014, amid lower international student inflows following changes to international student cap limits as outlined in the federal government's Immigration Levels Plan.

B.C.'s goods-producing sector (+2.7 per cent) returned to growth in 2025 after contracting (-3.1 per cent) in 2024. The rebound reflected gains in construction (+3.0 per cent), largely driven by non-residential building activity, and mining, quarrying, and oil and gas extraction (+6.2 per cent). Specifically, higher oil and gas extraction (+7.3 per cent) was a major contributor to growth in the sub-sector, while increased production of copper, nickel, lead, and zinc (+9.4 per cent) supported growth in mining and quarrying. In contrast, manufacturing (-0.5 per cent) declined for a fourth consecutive year, largely due to weaker output in wood products (-7.1 per cent) and paper manufacturing (-14.7 per cent).

In 2025, service-producing industries accounted for 78.2 per cent of B.C.'s economy, while goods-producing industries represented 21.8 per cent. Within the service-producing industries, the real estate, rental and leasing sector remained the largest share, followed by health care and social assistance and wholesale and retail trade. Among the goods-producing industries, construction continued to make up the largest share, followed by natural resources (which includes agriculture, forestry, fishing and hunting as well as mining, quarrying, and oil and gas extraction), and manufacturing.

External Trade and Commodity Prices

In 2025, the U.S. government introduced sweeping tariff hikes and trade policy changes that dramatically affected global exports. While many Canadian goods were exempt from tariffs under the Canada-United States-Mexico Agreement (CUSMA), some sectors such as forestry, steel, aluminum and automobile manufacturing were directly impacted. More broadly, volatile trade conditions throughout 2025 weighed on global exports and business investment. However, B.C. has been less exposed to U.S. tariffs relative to other provinces, benefitting from its diverse trade network and export base.

Exports by destination:

B.C.'s merchandise exports were relatively flat in 2025, as markets adjusted to shifting global trade conditions. Goods exports to the U.S. (B.C.'s largest trading partner) continued to decline, while increased exports to various non-U.S. destinations provided some offset. Overall, the total value of B.C. goods exports declined by 0.1 per cent in 2025 compared to 2024.

Annual goods exports to the U.S. declined for a third consecutive year, down 2.9 per cent in 2025, largely due to lower exports of lumber (-13.5 per cent), fabricated metal products (-19.3 per cent), and electricity (-27.1 per cent). Annual gains were concentrated in exports of natural gas (+33.7 per cent) and machinery and equipment (+5.1 per cent).

Outside the U.S., the value of goods exports to Mainland China (+26.7 per cent) increased, driven by higher shipments of metallic mineral products (+83.7 per cent), mainly copper ores and concentrates (+71.4 per cent), and other energy products (which includes petroleum and petroleum products, +274.2 per cent). In contrast, goods exports to Japan (-17.3 per cent), South Korea (-15.4 per cent), and India (-43.0 per cent) decreased compared to 2024, largely due to sharp declines in the value of coal exports, mainly reflecting lower prices, rather than volumes.

Appendix Tables A1.7 and A1.8 provide further detail on exports by major market and commodity groups.

In 2025, the U.S., China, and Japan accounted for nearly 80 per cent of B.C.'s total goods exports, with a small shift in the underlying composition. The U.S. accounted for 51.1 per cent of B.C.'s goods exports in 2025, down from 52.6 per cent in 2024. The share of goods destined for Japan dropped to 8.5 per cent in 2025 from 10.3 per cent in the prior year. By comparison, China's share of B.C.'s goods exports rose to 19.7 per cent, from 15.6 per cent in 2024.

Exports by commodity and prices:

Although B.C. saw a small decrease in exports compared to 2024, the province's diverse export base helped ease some tariff related trade disruptions in 2025. Notably, the LNG Canada Phase 1 terminal in Kitimat came online in mid-2025 and began exporting liquefied natural gas to Asia-Pacific markets. Annual gains in the value of total exports were led by shipments of metallic mineral products (+15.0 per cent), mainly copper ores and concentrates (+21.0 per cent), natural gas (+33.7 per cent) and other energy products (+20.3 per cent). Offsetting declines were led by coal (-21.5 per cent), softwood lumber (-8.4 per cent) and pulp (-10.7 per cent).

Commodity price dynamics were mixed in 2025. Oil prices retreated as global supply exceeded demand. The West Texas Intermediate (WTI) price averaged $65.46 per barrel, down 14.5 per cent from 2024. Natural gas prices rebounded from low levels in late-2025 driven by stronger winter-driven heating demand across North America. For the year, the plant inlet price of natural gas averaged $0.95 C/GJ in 2025, up 29.3 per cent compared to 2024.

The price of Western spruce-pine-fir (SPF) 2x4 lumber averaged $467 US/000 board feet in 2025, up 13.2 per cent compared to 2024. However, price growth in early 2025 reversed in the second half of the year reflecting weaker demand amid increased tariffs, in addition to existing anti-dumping and countervailing duties on lumber and soft U.S. homebuilding activity. Meanwhile, newsprint prices increased 2.6 per cent and pulp prices declined 6.2 per cent compared to 2024.

In 2025, the value of key B.C. metallic and mineral products fluctuated in response to shifting global demand. Copper prices increased compared to 2024, driven by strong demand from AI-technology and data centres, as well as defence systems and clean energy transition projects. In contrast, the price of metallurgical coal continued to decline for the third straight year, reflecting lower demand for steel production and ample global supply. Movements in other commodity prices were mixed in 2025. Precious metals such as gold and silver saw notable gains, while molybdenum and zinc posted modest increases and lead prices declined.

Manufacturing shipments:

B.C. manufacturing shipments edged down by 0.3 per cent in 2025, marking the third consecutive year of decline. Annual declines were driven by wood product manufacturing (-6.6 per cent), while gains were led by food (+5.2 per cent), machinery (+13.8 per cent), and primary metal manufacturing (+11.2 per cent).

Population

Population growth in British Columbia, and across all provinces, slowed markedly last year reflecting a sharp reversal in international migration trends. Following three years of strong growth, B.C.'s population increased by just 0.5 per cent to reach 5.698 million people on July 1, 2025. This deceleration led to B.C.'s slowest annual growth on record, as lower federal immigration targets significantly reduced the number of net non-permanent residents in the province.

B.C.'s total net migration decreased (-42,388 persons) in 2025, following a net inflow (+99,000 persons) in 2024. This shift was due to a decline in net international migration (-45,563 persons). Underlying this decline was a sharp drop in non-permanent residents (-80,915 persons), particularly the number of international study permit holders (-42,817 persons), amid tighter federal restrictions. The number of international work permit holders also declined (-29,970 persons). In contrast, interprovincial migration to B.C. increased (+3,175 persons) in 2025, reversing the net outflow (-2,137 persons) reported in 2024. Additionally, B.C.'s natural population growth (births minus deaths) turned positive in 2025 after four consecutive years of declines, reflecting both an increase in births and fewer deaths compared to 2024.

Labour Market

B.C.'s labour market moderated in 2025, reflecting slower population growth and trade-related economic uncertainty. Total employment rose by 1.1 per cent (+32,200 jobs), following a 2.3 per cent (+66,100 jobs) increase in 2024. Growth was led by part-time employment (+19,200 jobs), with a smaller gain in full-time employment (+12,900 jobs) following four years of strong growth. Job creation was concentrated in the private (+18,900 jobs) and public (+12,900 jobs) sectors, while self-employment grew marginally (+400 jobs). Underlying the annual gain in 2025, employment increased among both females (+12,100 jobs) and males (+20,000 jobs).

On an industry basis, B.C.'s services sector (+22,800 jobs) accounted for the majority of employment gains in 2025, led by professional, scientific, and technical services (+13,600 jobs) and wholesale and retail trade (+7,100 jobs). Declines in information, culture and recreation (-14,100 jobs) and other services (-6,200 jobs) employment partially offset these gains. Meanwhile, annual employment growth in the goods-producing sector (+9,400 jobs) was concentrated in construction (+15,400 jobs) and manufacturing (+7,500 jobs), which offset declines in the natural resources (-9,900 jobs) and utilities (-3,600 jobs) sectors.

B.C.'s labour force increased by 1.8 per cent in 2025, following 2.7 per cent growth in 2024. The moderate expansion reflects slower population growth and easing labour demand. As a result, B.C.'s labour force participation rate edged down 0.2 percentage points (pp) to reach 65.0 per cent in 2025, the lowest level since 2020. Last year, the labour force participation rate for the core working-age group (aged 25 to 54) increased by 0.7 pp compared to 2024. Meanwhile, the participation rate for youth (aged 15

to 24) and among workers aged 55 and over decreased by 2.3 pp and 0.8 pp, respectively. In 2025, the participation rate for males was 0.1 pp lower compared to 2024, while the female participation rate decreased by 0.4 pp.

Table 1.1 British Columbia Population and Labour Market Statistics

Sources: Statistics Canada (Tables 17-10-0005-01, 17-10-0040-01, 17-10-0020-01, 14-10-0023-01 - accessed June 2026)

Labour force growth continued to outpace job creation, bringing B.C.'s unemployment rate up to 6.2 per cent in 2025 compared with 5.6 per cent in 2024. Despite rising last year, B.C.'s unemployment rate remained below the national average of 6.8 per cent.

In 2025, B.C.'s unemployment rate among both females and males was 6.2 per cent. Meanwhile, the provincial job vacancy rate declined in 2025 as businesses scaled back hiring plans amid tariff-related economic uncertainty.

Appendix Table A1.5 provides more details on employment by sector and subsectors.

Consumer Spending, Inflation and Wages

Consumer spending in B.C. expanded at a robust pace in 2025 despite slower population growth and elevated economic uncertainty. Lower inflation and easing interest rates supported household purchasing power last year, contributing to a 6.4 per cent increase in nominal retail sales, the strongest annual growth in four years. Meanwhile, consumer price inflation was 2.1 per cent in 2025, indicating that the rise in retail sales reflected higher sales volumes in addition to moderate price growth. In 2025, retail sales gains were broad-based, with eight of nine sectors expanding. Gains were led by motor vehicle and parts dealers (+12.7 per cent), partly due to a surge in auto purchases ahead of anticipated U.S. tariffs, as well as sporting goods, hobby, musical instrument, book and miscellaneous retailers (+18.2 per cent) and health and personal care stores (+9.0 per cent). Annual increases were partially offset by lower sales at gasoline stations and fuel vendors (-3.0 per cent), due to lower gasoline prices.

While retail trade data provides detailed and timely information on consumer spending on goods, comparable provincial data for spending on services is limited. In B.C., nominal sales at food services and drinking places, a proxy for services sales activity, advanced by 4.6 per cent in 2025 following 3.1 per cent growth in 2024. At the national level, household spending on services increased by 2.3 per cent in real terms and 5.7 per cent in nominal terms in 2025.

Inflation in B.C. continued to ease in 2025, averaging 2.1 per cent, to reach the lowest rate since 2020. This moderation was driven by a slowdown in services inflation (from 4.4 per cent in 2024 to 2.7 per cent in 2025), while goods inflation increased moderately (from 0.2 per cent to 1.3 per cent). Shelter costs continued to be the main contributor, rising by 2.8 per cent, but slowed substantially from 6.1 per cent in 2024. Both owned and rented accommodation price growth slowed, reflecting lower mortgage rates and reduced population growth. Food price growth rose to 3.2 per cent, from 3.0 per cent in 2024, reflecting higher grocery prices. Meanwhile gasoline prices declined (-7.6 per cent), partly due to lower global oil prices and the removal of the B.C. consumer carbon tax, which helped to reduce overall inflation.

Wage growth in B.C. moderated in 2025, amid easing hiring demand and fewer job vacancies. Employee compensation, which is defined as aggregate economy-wide wages, salaries, and employers' social contributions, increased by 3.1 per cent, following four years of strong growth. The average weekly wage rate, a narrower measure of earnings, also rose by 3.1 per cent in 2025, following a 5.2 per cent increase in 2024. Despite slower growth last year, wage growth outpaced consumer price inflation, indicating modest gains in real wages.

Table 1.2 British Columbia Price and Earnings Indicators

¹ As of November 2025 Provincial Economic Accounts

² Component of income-based GDP, including wages, salaries and employers' social contributions earned in B.C. by residents and non-residents of the province. 2025 value for compensation of employees is from Statistics Canada Table 36-10-0205-01.

Sources: Statistics Canada (Tables 18-10-0005-01, 14-10-0064-01, 36-10-0221-01, 36-10-0205-01, 36-10-0224-01 - accessed April 2026)

Housing

Housing construction moderated in 2025 but remained above the 10-year historical average. B.C. housing starts totalled 44,193 units in 2025, down 3.6 per cent annually amid heightened economic uncertainty and labour and material shortages. Construction of multiple-unit and single-unit starts decreased at similar rates, declining by 3.6 per cent and 3.5 per cent, respectively.

Among Census Metropolitan Areas (CMAs) in B.C., the number of homes under construction declined in Vancouver (-5.6 per cent) and Kelowna (-17.3 per cent), while increases in Abbotsford (+44.3 per cent) and Victoria (+10.9 per cent) provided a partial offset. Housing completions rose significantly in Vancouver (+20.5 per cent) and Kelowna (+86.3 per cent), both reaching record highs in 2025. Annual completions also increased in Abbotsford (+25.6 per cent) but declined in Victoria (-10.9 per cent) compared to 2024. Overall, residential building permits, a leading indicator of future housing activity in the province, improved in 2025 following two years of declines. In 2025, the total value of B.C. residential building permits increased by 6.5 per cent compared to 2024 while the total number of residential units permitted increased by 2.8 per cent, driven by growth in the multiple-unit segment.

B.C. home sales activity softened in 2025, constrained by elevated economic uncertainty, easing population growth, and affordability challenges. Overall, home sales decreased by 5.7 per cent in 2025, remaining below the ten-year historical average. The decline was led by Greater Vancouver (-10.2 per cent) and the Fraser Valley (-16.6 per cent), while higher sales were led by the Okanagan-Mainline (+8.1 per cent), Kootenay (+7.2 per cent), and South Okanagan (+11.2 per cent) regions.

In 2025, muted demand contributed to a 2.9 per cent decline in the provincial MLS average home sale price compared to 2024. Meanwhile, the MLS composite benchmark price, which incorporates attributes by dwelling type in each region, declined by 2.0 per cent last year. The benchmark price fell in the Fraser Valley (-4.2 per cent) and in Greater Vancouver (-2.1 per cent) but increased in the Vancouver Island (+2.7 per cent), Victoria (+2.0 per cent), Okanagan Valley (+1.6 per cent) and Chilliwack (+1.4 per cent) regions.

Tourism

The number of international travellers to B.C. moderated last year after a strong finish to 2024, which saw a brief boost from a series of large-scale concerts in Vancouver. Overall, the total number of international visitors edged down 0.9 per cent in 2025, following three years of robust growth. The number of U.S. visitors remained above pre-pandemic levels despite a 2.3 per cent decrease last year compared to 2024. By comparison, the number of non-U.S. visitors rose by 4.4 per cent in 2025, but remained below pre-pandemic levels. Meanwhile, B.C. saw strong growth in domestic travel last year as the province welcomed more Canadian travellers compared to 2024.

Global Economy

Global economic growth was resilient in 2025 despite shifting trade and immigration policy landscapes. After a strong start, driven by front-loaded trade and investment activity ahead of U.S. tariffs, the global economy moderated in the second half of 2025. Overall, the International Monetary Fund estimates that global real GDP rose by 3.4 per cent in 2025, matching the pace of growth in 2024. While inflation continued to moderate in most economies, heightened trade uncertainty led Canadian and U.S. central banks to pause interest rate cuts until the latter half of 2025 before gradually resuming an easing m onetary policy stance. In contrast, the European Central Bank continued cutting interest rates until mid-2025 before holding them unchanged for the remainder of the year, while the Bank of Japan continued to raise interest rates in response to persistent inflation exacerbated by a weaker yen.

Among major economies, trade tensions and policy uncertainty tempered activity. The U.S. economy expanded by 2.1 per cent in 2025, slowing from 2.8 per cent growth in 2024, while Canada's economy increased by 1.9 per cent, following 2.0 per cent growth a year earlier, on an expenditure basis.

Overseas, China's economy grew by 5.0 per cent, matching the previous year's growth, while Japan's economy expanded by 1.1 per cent after contracting by 0.2 per cent in 2024. Economic activity in the euro zone continued to gradually improve, with real GDP growth of 1.5 per cent in 2025, up from 0.9 per cent growth in the prior year.

Canada

Canada's economy moderated in 2025 amid unpredictable U.S. tariffs and easing global economic activity in the second half of the year. On a GDP by expenditure basis, Canadian real GDP growth edged down from 2.0 per cent in 2024 to 1.9 per cent in 2025, the slowest pace since 2020. Growth was led by household consumption, supported by lower interest rates and slowing inflation. Federal government spending and investment also made notable contributions to annual growth. Gains were partly offset by continued weakness in business investment in machinery and equipment, which declined for the third consecutive year. Meanwhile, both total exports and total imports contracted for the first time since 2020, reflecting ongoing trade disruptions.

Canada's labour market activity slowed in 2025, reflecting weak population growth, ongoing economic uncertainty, and tariff-related pressures on export-sensitive sectors. Total employment increased by 1.4 per cent (+298,200 jobs), following 1.9 per cent (+395,700 jobs) growth in 2024. Job gains were concentrated in the services sector (+282,600 jobs), while goods-producing industries saw a modest increase (+15,600 jobs). Overall, annual gains were led by health care and social assistance (+76,500 jobs); finance, insurance, real estate, rental and leasing (+65,500 jobs); and wholesale and retail trade (+54,500 jobs). In contrast, the largest declines were in other services, excluding public administration (-25,000 jobs); business, building and other support services (-18,100 jobs); and forestry, fishing, mining, quarrying, oil and gas (-15,000 jobs). Meanwhile, employment in manufacturing, a sector directly impacted by tariffs, only saw a modest decline in 2025 (-1,600 jobs), largely concentrated in Ontario. In 2025, the national unemployment rate averaged 6.8 per cent, up from 6.3 per cent in 2024, as labour force growth (+2.0 per cent) outpaced employment gains.

National home sales activity was subdued in 2025 as support from lower interest rates was offset by elevated economic uncertainty and slower population growth. Annual MLS home sales declined by 2.6 per cent in 2025, following a 7.4 per cent increase in 2024. Weaker housing market conditions placed downward pressure on home prices last year. The national average home sale price declined by 1.5 per cent in 2025, following 0.7 per cent growth in 2024. On the construction side, Canadian housing starts improved despite persistent cost pressures. National housing starts increased by 5.6 per cent in 2025. Government support measures for rental construction helped boost activity, particularly in the early part of the year. By housing type, multiple-unit starts rose by 8.3 per cent, reflecting stronger demand for more affordable housing options, while single-unit starts declined by 4.1 per cent. In 2025, the value of residential building permits increased by 1.8 per cent, compared to 2024, while the number of permits for dwelling-units created declined by 3.3 per cent.

Consumer price inflation continued to ease last year despite upward pressure from tariffs. Headline inflation averaged 2.1 per cent in 2025, down from 2.4 per cent in 2024, reflecting easing service price inflation and lower prices for gasoline (-8.6 per cent), partly due to the removal of the consumer carbon tax. Despite slower shelter price inflation in 2025 compared with the previous year, price growth remained elevated at 3.1 per cent. Food prices increased 3.2 per cent, reflecting ongoing supply chain disruptions and the impact of Canadian counter-tariffs on U.S. goods. Meanwhile, nominal retail sales increased by 3.6 per cent in 2025, marking the strongest growth since 2022. Gains were broad-based, with all major categories rising except gasoline stations and fuel vendors (-4.0 per cent). Sales gains were led by motor vehicle and parts dealers (+4.0 per cent) and general merchandise retailers (+4.9 per cent), followed by food and beverage retailers (+2.8 per cent). In real terms (excluding price effects), total retail sales rose by 1.8 per cent in 2025.

In 2025, Canadian exports were affected by evolving trade disruptions. Export activity was stronger in the first quarter of 2025, as firms accelerated shipments ahead of expected U.S. tariffs. However, this momentum weakened in subsequent quarters. Overall, nominal merchandise exports edged down 0.2 per cent, following 1.5 per cent growth in 2024. Exports to the U.S., which accounted for 71.9 per cent of Canadian exports in 2025, fell by 5.4 per cent amid U.S. tariffs. This weakness was partly offset by increased exports to China (+14.8 per cent) and the European Union (+23.4 per cent). In terms of commodities, annual declines were concentrated in energy products (-3.7 per cent), basic and industrial chemical, plastic and rubber products (-11.0 per cent), forestry products and building and packaging materials (-9.1 per cent), and motor vehicles and parts (-4.4 per cent). These losses were partially offset by notable gains in metal and non-metallic mineral products (+12.6 per cent). Meanwhile, service exports grew by 3.8 per cent in 2025, led by increased exports of commercial services.

United States

Economic growth in the U.S. slowed in 2025 as changes to trade and immigration policies, as well as a lengthy government shutdown late in the year, weighed on growth. Further, the imposition of tariffs skewed economic activity over the course of the year. Overall, U.S. real GDP increased by 2.1 per cent in 2025, down from 2.8 per cent growth in 2024. Consumer spending and business investment in machinery and equipment and intellectual property products supported the annual gain. Meanwhile, business investment in residential and non-residential structures fell last year following increases in 2024. Trade dynamics fluctuated during the year. Imports surged in early 2025 as businesses accelerated shipments ahead of higher tariffs but declined throughout the rest of the year. Net exports of goods and services increased by 1.6 per cent in 2025, down from 3.6 per cent growth in the previous year. Overall, U.S. economic growth moderated in 2025 amid evolving tariffs, while price pressures developed gradually over the year, with increased business costs generating some pass-through to consumer prices.

The U.S. labour market softened last year amid reduced immigration flow, which constrained labour supply, and slower economic momentum. Employment edged up 0.5 per cent in 2025, the weakest pace since 2020, while the unemployment rate rose to average 4.3 per cent, up from 4.0 per cent in 2024. The labour force participation rate decreased to 62.4 per cent in 2025 from 62.6 per cent in the prior year.

Subdued housing market activity continued in 2025, reflecting elevated mortgage rates, tariffs, and heightened economic uncertainty. U.S. housing starts declined by 0.6 per cent to 1.36 million units, extending a downward trend that began in 2022. By housing type, weakness remained concentrated in the single-unit segment, where starts declined by 6.9 per cent, while multi-unit starts increased by 17.4 per cent. Meanwhile, new and existing home sales were relatively flat in 2025, with the median price of new homes declining and the median price for existing homes edged up compared with 2024.

Asia

China's economic activity was mixed in 2025, with exports and industrial sectors outperforming domestic consumption and investment. Overall, China's real GDP grew by 5.0 per cent in 2025, matching the government's official target pace and unchanged from the previous year. Growth occurred despite underlying weaknesses, including soft domestic demand and a prolonged downturn in the property market. Exports played a central role, although momentum moderated toward the end of the year. Despite significantly lower exports to the U.S. in 2025, China exported more goods than it imported overall, with progress in diversifying toward non-U.S. markets, particularly the euro area and the Association of Southeast Asian Nations (a group of 11 countries also referred to as ASEAN). Meanwhile, industrial production in China remained robust last year, supported by strong global demand for high technology products.

Japan's economy showed resilience in 2025, growing by 1.1 per cent following a contraction of 0.2 per cent in 2024. Domestic demand was the main driver of growth, supported by business investment and a gradual strengthening in private consumption. Despite a temporary boost early in the year, weakening global demand and the impact of U.S. tariffs on key sectors such as automobile manufacturing weighed on Japan's export sector last year. After decades of near-zero inflation, price growth remained above the Bank of Japan's 2 per cent target in 2025. In response, Japan's central bank raised interest rates to 0.75 per cent by the end of 2025 to reach the highest level since August 1995.

Europe

The euro zone economy expanded in 2025 despite challenges in the trade sector. Real GDP in the region increased by 1.5 per cent in 2025, up from 0.9 per cent growth in the previous year. Domestic demand was the main driver of growth as a strong labour market and rising real wages supported private consumption. Government spending also contributed to growth, including continued infrastructure investment and increased defence spending. Global demand for euro zone goods was subdued last year aside from a temporary boost in early 2025 as companies rushed to export goods before U.S. tariffs took effect. Regionally, economic performance varied across member countries. Spain's economy remained strong in 2025 growing by 2.8 per cent, supported in part by robust services activity. By comparison, France (+0.9 per cent) and Italy (+0.5 per cent) experienced moderate economic growth. Germany's economic output was nearly flat (+0.2 per cent), following two consecutive years of contraction, reflecting subdued industrial activity and weak external demand.

Financial Markets

Central banks faced significant challenges navigating the economic impacts of U.S. tariffs and ongoing supply chain disruptions in 2025. Monetary policy gradually eased in the latter half of the year as inflation pressures moderated and economic growth slowed. Overall, the Bank of Canada (BoC) reduced its policy rate by 100 basis points in 2025, compared with 75 basis points by the U.S. Federal Reserve (Fed), reflecting somewhat weaker economic conditions in Canada.

The BoC began 2025 with two consecutive interest rate cuts, lowering its policy rate from 3.25 per cent to 2.75 per cent. It then paused from April to August to assess the complex impacts of tariffs on the economy. Rate cuts resumed in September and October in response to weakening economic activity and easing inflation risks, bringing the policy rate down to 2.25 per cent. The BoC held the overnight rate steady at that level for the remainder of the year, citing moderate economic activity and a stable inflation outlook.

The Fed held its key interest rate in the range of 4.25 per cent to 4.50 per cent for most of 2025 amid elevated inflation, strong economic activity, and stable employment. Despite lingering price pressures, the Fed gradually lowered interest rates from September through December, citing easing economic activity and rising unemployment. These interest rate cuts brought the target range for the federal funds rate down to reach 3.50 per cent to 3.75 per cent by year-end.

Uncertainty around U.S. tariffs and shifting monetary policy led to notable exchange rate volatility last year. The Canadian dollar hit a five-year low in February 2025 before rising through June, reflecting a global depreciation of the U.S. dollar amid tariffs, policy uncertainty, and weaker growth prospects south of the border. The Canadian dollar weakened again in the second half of 2025, reflecting lower oil prices and a wider differential between Canadian and U.S. interest rates. The Canadian dollar regained some ground in late-2025 as the Fed resumed interest rate cuts. Overall, the value of the Canadian dollar depreciated to average 71.5 US cents in 2025, down from 73.0 US cents in 2024.

Table 1 - Data Volatility

Standard deviations and averages of growth rates of selected B.C. economic variables and prices

¹ Calendar and fiscal year data yield similar data volatility results

² Measured as the mean

Sources: Statistics Canada; Haver Analytics; Ministry of Energy and Climate Solutions; Ministry of Mining and Critical Minerals; Ministry of Forests; Canadian Real Estate Association; Canada Mortgage and Housing Corporation; Ministry of Finance calculations

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Part 2

Financial Review

2025/26 Overview

Table 2.1 2025/26 Fiscal Summary

¹ Figures have been restated to reflect government accounting policies in effect at March 31, 2026, and the impact of Statistics Canada's historical data revisions of economic growth.

The provincial government ended the 2025/26 fiscal year with a deficit of $7.7 billion, $3.2 billion lower than Budget 2025. (See Table 2.5 for detailed quarterly changes to the forecast.)

Revenue totalled $86.9 billion in 2025/26, $2.9 billion higher than the Budget 2025 projection. Higher revenues were recorded from the tobacco settlement, income tax revenue, investment earnings, miscellaneous sources and commercial Crown corporations' net incomes, partly offset by the elimination of the consumer carbon tax, lower natural resources revenues and federal government transfers. (See Revenue section for further details.)

Total government expenses of $94.6 billion were $344 million lower than Budget 2025 due mainly to the cessation of the Climate Action Tax Credit (following the cancellation of the provincial consumer carbon tax effective April 1, 2025), lower net spending by service delivery agencies, and additional savings from unused Contingencies Vote allocations and lower ministry spending; partly offset by fire and emergency management costs, and higher spending funded by increased recoveries from external parties.

(See Expense section for further details.)

Taxpayer-supported capital spending on hospitals, schools, post-secondary institutions, transportation infrastructure, social housing and other projects totalled $11.4 billion, $4.0 billion less than Budget 2025 due to changes in the timing of projects across the sectors.

Self-supported capital spending of $4.3 billion was $509 million lower than budget mainly in power generation and transmission projects. (See Capital section for further details.)

Taxpayer-supported debt ended the year at $117.4 billion, which is $1.3 billion lower than forecast in Budget 2025. This decrease was mainly due to the lower operating deficit, lower capital spending partly offset by impacts of a higher opening debt and cash balance, from pre‑funding financial requirements and other working capital changes. Self‑supported debt was $37.4 billion, $558 million lower than budget mainly due to lower capital spending. (See Provincial Debt section for further details.)

Financial information in this publication, including this chapter and Appendix 2, is sourced from the government's 2025/26 Public Accounts.

Revenue

Revenue totalled $86.9 billion in 2025/26, $2.9 billion higher than the Budget 2025 projection and up 3.4 per cent from 2024/25. Compared to budget, higher revenues were due to the tobacco settlement, and in other revenue and commercial Crown corporations' net incomes, partly offset by lower revenue from taxation, natural resources revenues and federal government transfers.

Changes of the major revenue components from Budget 2025 are outlined as follows:

Income Tax Revenue

Personal income tax revenue was up $1,650 million from budget. This is due to a $985 million increase relating to the prior year, mainly due to stronger final 2024 tax assessments, reflecting stronger incomes from middle to higher income earning individuals. The remaining $665 million increase mainly reflects stronger financial markets activity in 2025, and partial impacts of Budget 2026 provincial tax measures.

Table 2.2.1 Personal Income Tax Revenue Changes from Budget 2025

Corporate income tax revenue was up $1,748 million mainly due to higher final settlement payments relating to the prior year (2024) and higher 2025 instalment payments from the federal government. The prior year's final settlement payment relating to the 2024 tax year resulted in a $1,003 million increase. This increase is due to stronger than expected final 2024 taxes assessed resulting in an increase in B.C. taxes of 3.6 per cent in 2024. In addition, there was also an increase of $745 million in instalments, mainly reflecting a higher B.C. payment share as well as a higher expected national corporate tax base.

Table 2.2.2 Corporate Income Tax Revenue Changes from Budget 2025

Other Tax Revenue

Consumption taxes were $2,979 million lower than budget.

Sales tax revenues were down $125 million from budget mainly reflecting lower nominal consumer expenditure on services and business investment as well as higher refunds.

Carbon tax revenue was down $2,795 million from budget due to the elimination of consumer carbon tax effective April 1, 2025.

Table 2.2.3 Consumption Tax Revenue Changes from Budget 2025

Tobacco tax revenue was down $144 million from budget reflecting a decline in consumption volumes.

Fuel tax revenue was up $85 million from budget mainly due to higher gasoline and diesel fuel sales volumes. Higher volumes are also due to the impacts of the removal of the consumer carbon tax.

Property tax revenue was $5 million lower than budget due to lower revenues from residential school property taxes offset by higher business school property and rural property taxes. Speculation and vacancy tax revenue of $99 million in 2025/26 was $3 million lower than the budget estimate, based on declarations by property owners for 2025 and includes the partial impact of measures announced in Budget 2025.

Table 2.2.4 Property Tax Revenue Changes from Budget 2025

Property transfer tax revenue was $566 million lower than budget due to lower than expected residential sales values, reflecting reduced home sales activity as well as lower net in-migration.

Employer health tax revenue was $125 million lower than budget mainly due to decreases in employer payrolls, reflecting lower wages and salaries growth.

Insurance premium tax revenue was $86 million higher than budget mainly due to higher activity and premiums reflecting increased assessments of risks including climate change, inflationary increases and increased prior year taxable premiums.

Table 2.2.5 Other Tax Revenue Changes from Budget 2025

Natural Resources Revenue

Total natural resource revenues in 2025/26 were $500 million below the budget estimates. 

Natural gas royalties were $67 million lower than budget mainly due to lower prices for natural gas and other by-products, reflecting higher than average storage inventories in North America. These declines are partially offset by decreased utilization of infrastructure program credits. In 2025/26, natural gas prices averaged $0.99 ($Cdn/ gigajoule, plant inlet), a 23.8 per cent decrease from the Budget 2025 assumption. Payments of $133 million were made through the Ministry of Indigenous Relations and Reconciliation (MIRR) to First Nations in support of natural gas royalties revenue sharing agreements.

Table 2.2.6 Energy and Mineral Revenue Changes from Budget 2025

Coal, metals and other minerals revenue was $296 million lower than budget mainly due to higher mining and capital costs as well as lower metallurgical coal prices attributable to a global excess coal supply and weak global demand for high-quality coal raw material. This decrease is partially offset by higher copper and other metal prices. Metallurgical coal prices averaged $199 (US/tonne) in 2025/26, down 8.7 per cent from the budget assumption. Copper prices were $4.89 (US/lb) in 2025/26, up 13.2 per cent from the budget assumption. Payments of $54 million were made through MIRR to First Nations in support of coal, metals and other minerals revenue sharing and other agreements.

Revenue from electricity sales under the Columbia River Treaty was $46 million lower than budget mainly due to lower Mid C electricity prices, which averaged

$58.45 ($US per mega-watt hour), down 15.7 per cent from the budget assumption ($69.38). Lower average Mid C electricity prices reflect mild weather, moderate natural gas prices and growth in wind and solar generation. Payments of $32 million were made through MIRR to First Nations in support of electricity sales under the Columbia River Treaty revenue sharing and other agreements.

Revenue from other energy sources was $58 million higher than budget mainly due to higher fees and levies collected by the BC Energy Regulator and higher cash auction sales of Crown land leases.

Forests revenue was $121 million lower than budget mainly due to lower than expected stumpage revenues, reflecting regular updates to the market pricing system and decreased average stumpage rates, partly offset by increased lumber prices and harvest volumes. Logging tax revenues were also lower. Total Crown harvest volumes for 2025/26 were 31.6 million cubic metres, 5.3 per cent higher than the budget assumption (30.0 million cubic metres). Lumber prices for spruce, pine and fir (SPF) 2x4 averaged $467 ($US/1000 bf) in 2025, 6.1 per cent higher than the budget assumption ($440). Payments of $114 million were made through MIRR to First Nations in support of Forest Consultation and Revenue Sharing Agreements.

Table 2.2.7 Forest Revenue Changes from Budget 2025

Other natural resource revenues, comprised of revenue from water rentals and hunting and fishing licenses, were $28 million lower than budget mainly due to decreased water rentals collected under the Water Sustainability Act, reflecting lower actual 2024 generation and reduced inflows to reservoirs due to lower precipitation and snowpack, resulting in reduced power generation by BC Hydro and independent power producers.

Other Taxpayer-Supported Sources

Revenue from fees, investment earnings and other miscellaneous sources totalled $15.7 billion, up $3.7 billion from budget.

Fee revenues totalled $5.3 billion, up $66 million from budget mainly due to higher fees collected by health authorities, partly offset by lower revenues from post-secondary institutions, K-12 school districts and recoveries related to nominal rent tenures.

Investment earnings were $2.0 billion, up $203 million from budget due in part to higher cash balances held by government to meet liquidity requirements, as well as higher investment returns from post-secondary institutions and health authorities.

Table 2.2.8 Other Revenue Changes from Budget 2025

Miscellaneous revenue totalled $8.4 billion, up $3.4 billion from budget mainly due to a one-time $2.6 billion gain to the tobacco settlement. The Province was a claimant in the Canada-wide legal action against three tobacco manufacturers to recover costs of treating tobacco related diseases. The Ontario Superior Court of Justice approved the proposed Plans of Compromise and Arrangement, subject to a set of conditions, in March 2025. Remaining higher revenue relates to recoveries under the PharmaCare program and revenue collected by taxpayer-supported Crowns and the SUCH1 sector.

Table 2.2.9 Federal Government Transfer Changes from Budget 2025

Federal Government Transfers

Contributions from the federal government totalled $14.5 billion, $744 million below budget.

Canada Health Transfer and Canada Social Transfer entitlements were down $86 million mainly due to lower than assumed B.C. share of the national population (13.68 per cent compared to 13.75 per cent forecast at budget).

Other federal government contributions were down $658 million from budget.

The decrease mainly reflects $598 million in lower transfers under the Disaster Financial Assistance Arrangements (DFAA). The decrease in DFAA revenue reflects refined cost estimates and delays in timing of eligible spending to future years. Lower recoveries of $28 million, compared to budget, resulted from reduced spending in health programs and public transit in Ministries. Other ministry receipts of federal contributions are $20 million lower mainly due to decreased funding for production insurance program and changes to accounting treatment applied to transfers in support of the Labour Market Agreement for Persons with Disabilities. SUCH sector entities (mainly K-12 schools) received $10 million more in federal contributions. Contributions received by taxpayer-supported Crown corporations were down $22 million (mainly BC Housing).

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¹ SUCH: School districts, universities, colleges and institutes, and health organizations.

Commercial Crown Corporations

The net income of commercial Crown corporations (government business enterprises) totalled $4.7 billion in 2025/26, $677 million higher than Budget 2025, and

$102 million lower than 2024/25. The variance from budget in overall earnings is mainly due to an improvement in the operating results of Insurance Corporation of British Columbia (ICBC).

British Columbia Hydro and Power Authority

BC Hydro's net income was $721 million, $9 million higher than the forecast in Budget 2025 primarily due to various changes in revenue and expense.

Many variances, including those related to revenues, cost of energy, amortization, finance charges and others are deferred to regulatory accounts, as approved by the British Columbia Utilities Commission, and do not directly impact net income.

British Columbia Liquor Distribution Branch

BC Liquor Distribution Branch's net income of $1.0 billion was $22 million lower than the forecast in Budget 2025 and $89 million lower than 2024/25 due to lower sales volumes over the year.

British Columbia Lottery Corporation

BC Lottery Corporation's net income of $1.3 billion2 was $29 million lower than the prior year and $13 million lower than Budget 2025. The decrease in net income was primarily due to lower revenues earned from lottery and casino tables partly offset by savings from cost containment measures.

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2 Net of payments to the federal government and payments to the BC First Nations Gaming Revenue Sharing Limited Partnership in accordance with section 14.3 of the Gaming Control Act (B.C.).

Insurance Corporation of British Columbia

The Insurance Corporation of British Columbia's reported net income was approximately $1.5 billion, compared to the $800 million net income projected in Budget 2025, and $133 million lower than the previous year. The improvement over budget was mainly driven by lower costs from both Enhanced Accident Benefit claims and Material Damage claims.

More information about commercial Crown corporations' financial results and performance measures is provided in each corporation's Annual Service Plan Report available at its respective website.

Table 2.3 Revenue by Source

1 Includes provincial sales tax and HST/PST housing transition tax related to prior years.

2 Columbia River Treaty, Crown land tenures, other energy and minerals, water rental and other resources.

3 Healthcare-related, motor vehicle, and other fees.

4 Includes reimbursements for health care and other services provided to external agencies, and other recoveries.

5 Includes contributions for health, education, community development, housing and social service programs, and transportation projects.

6 Net of payments to the federal government and payments to the BC First Nations Gaming Revenue Sharing Limited Partnership in accordance with section 14.3 of the Gaming Control Act (B.C.).

7 Does not include non-controlling interest.

8 Includes Columbia Power Corporation, BC Railway Company, Columbia Basin power projects, and post-secondary institutions' self-supported subsidiaries.

Table 2.4 Expense by Ministry, Program and Agency

1 Figures have been restated to reflect government's organization and accounting policies in effect at March 31, 2026.

2 Statutory authorizations are appropriations permitted by an Act other than a Supply Act.

3 Reflects payments made under an agreement where an expense from a voted appropriation is recorded as revenue by a special account (Housing Endowment Fund and British Columbia Training and Education Savings Program).

4 Savings in 2025/26 through government's expenditure management and efficiency review are now reflected in individual ministry total spending and also form part of the unused Contingencies vote allocation. Additional details can be found in the topic box on page 41.

Table 2.5 2025/26 Operating Results by Quarter

1 Detailed descriptions of changes are provided in the revenue and expense sections of this report.

2 Government achieved total savings of $758 million in 2025/26 through unused Contingencies Vote allocations and Ministry and Legislative Assembly savings. This includes approximately $467 million through government's expenditure management and efficiency review. Additional details can be found on page 41.
An adjustment is made on this table for the expenditure management target amount as the savings are now reflected in Unused Contingencies spending allocation and Ministry and Legislative Assembly savings amounts.

3 Includes BC Transportation Financing Authority, BC Transit, BC Housing Management Commission, Community Living BC, and other entities.

Expense

In 2025/26, government expenses totalled $94.6 billion, $344 million lower than Budget 2025 and $3.2 billion (3.5 per cent) higher than the previous year.

Consolidated Revenue Fund Spending

Statutory spending by the government during the year totalled $947 million in the following areas:

• $407 million in wildfire costs over the voted appropriation, for a total spending on fire management of $645 million (Ministry of Forests);

• $228 million mainly for prior year wildfires and flooding events (Ministry of Emergency Management and Climate Readiness);

• $108 million for expenses under the Financial Administration Act, including signed agreements under the Balanced Measures Mandate (Ministry of Finance);

• $37 million for a higher actuarial adjustment under the Insurance Risk Management Account;

• $97 million for increased debt servicing costs; and

• $70 million in other areas.

Other CRF spending was $1.3 billion lower than Budget 2025 due to the elimination of the Climate Action Act Credit and lower other refundable tax credits ($717 million), additional savings through the unused Contingencies Vote allocation and lower ministry spending ($458 million), and other expense changes ($105 million), mainly prior period adjustments.

Contingencies

Government uses the Contingencies Vote to fund new programs, priority initiatives, unanticipated events and manage budget pressures. Budget 2025 included a Contingencies Vote of $4.0 billion of which $3.4 billion was spent on the following:

• $896 million to fund wage increases under the government's public sector bargaining Balanced Measures Mandate (various ministries);

• $765 million to support access to healthcare and clinical services as part of the primary care strategy. This funding also supported various mental health and addictions initiatives including treatment and recovery programs, community based supports and the In Vitro Fertilization pilot program (Ministry of Health);

• $179 million mainly to fund increased enrolment in K-12 schools (Ministry of Education and Child Care);

• $173 million to fund various public safety and security-costs related to the FIFA World Cup 2026 event, BC Corrections recruitment and retention, repeat violent offenders initiative, and other core policing services (Ministry of Public Safety and Solicitor General);

• $160 million for various treaty and non-treaty agreements with First Nations (Ministry of Indigenous Relations and Reconciliation);

• $154 million for the tobacco settlement legal costs and various programs such as the Repeat Violent Offending Intervention Initiative (Ministry of the Attorney General);

• $151 million to fund various land and natural resource management initiatives including Blueberry River Restoration Society, BC Salmon Restoration and Innovation Fund, and to increase funding for future projected liabilities for contaminated Crown land (Ministry of Water, Land and Resource Stewardship);

• $138 million to fund Children in Care and alternatives to care, Children and Youth with Support Needs, and supports for youth formerly in care (Ministry of Children and Family Development);

• $137 million mainly for various CleanBC initiatives, including the CleanBC Clean Industry Fund, transition of carbon pricing to an Output-based Pricing Model, and funding for Treaty 8 restoration initiatives (Ministry of Energy and Climate Solutions);

• $122 million for costs related to the Investing in Canada Infrastructure Program and attainable and affordable housing initiatives (Ministry of Housing and Municipal Affairs);

• $84 million for the Taseko Standstill Agreement (Ministry of Mining and Critical Minerals);

• $65 million to fund various economic development initiatives including the BC Manufacturing Jobs Fund, the Integrated Marketplace, Stronger BC Investment Framework, and the provincial InBC Investment Corporation (Ministry of Jobs and Economic Growth);

• $56 million mainly to support reforestation under the Forest Investment and FireSmart Community Funding and Supports programs (Ministry of Forests);

• $52 million to fund initiatives related to the Future Ready Action Plan (Ministry of Post-Secondary Education and Future Skills);

• $51 million to fund the stabilization of the Neucel Pulp Mill site, support BC Parks operations and recreation sites and trails maintenance and repairs, and various other programs (Ministry of Environment and Parks); and

• $235 million to fund various other operating pressures and initiatives such as information management/technology enterprise services, cyber security, digital storage, the Agricultural and Income Stabilization Trust and the temporary income assistance caseload.

Spending Recovered from External Parties

Spending recovered from external parties relates to program spending funded or co-funded by parties outside of government. Cost-recovered spending was $693 million higher than Budget 2025 due to:

• $655 million more in miscellaneous recoverable costs mainly related to PharmaCare and valuation allowance for tobacco settlement receivables;

• $188 million in additional recoveries from the federal government to support highway infrastructure under the Disaster Financial Assistance Arrangements, and various education, social and natural resource programs; offset by

• $85 million in lower recoveries from commercial Crown corporations through the fiscal agency loan program; and

• $65 million in lower recoveries in various other programs.

These recovered spending changes are offset by an equal net increase in revenue and as a result have no net impact on government's financial results.

Operating Transfers to Service Delivery Agencies

Operating transfers paid to service delivery agencies (SDAs) may change during the fiscal year as ministries make budget allocations, Contingencies Vote access is approved, and funding is provided under statutory authority provisions. In 2025/26, operating grants to agencies increased by $1.1 billion, compared to Budget 2025, primarily due to higher grants to the education sector mainly to fund wage mandate increases ($468 million), higher grants to various other service delivery agencies ($446 million), and higher grants to the health authorities mainly to fund increased staffing costs and the primary care strategy ($139 million).

Operating transfers provided to service delivery agencies are eliminated on consolidation, for accounting purposes. These funding increases are largely related to spending changes noted below.

Service Delivery Agency Spending

Service delivery agency spending was $341 million higher than Budget 2025, made up of the following:

• School districts' expenditures were $139 million higher than Budget 2025 due primarily to salary increases and higher capital asset amortization.

• Post-secondary institutions' expenditures were $74 million lower than Budget 2025 mainly due to lower operating costs as a result of government's expenditure management and efficiency review, and lower capital asset amortization.

• Health authority and hospital society spending was $366 million higher than

Budget 2025 due to increased costs to address health system priorities as well as salaries and operating costs associated with growing demand for healthcare services.

• Spending in other service delivery agencies was $90 million lower than Budget 2025 reflecting lower spending mainly by the BC Transportation Financing Authority ($226 million) offset by higher spending by Community Living BC ($58 million) and net higher spending by various agencies ($78 million).

Higher service delivery agency spending is funded primarily by increased operating transfers provided by government as noted above.

A detailed review of the above changes by quarter is available in Table 2.5. Further information on 2025/26 spending by function is provided in Appendix Table A2.6.

Provincial Capital Spending

In 2025/26, capital spending totalled $15.7 billion, which was comprised of $11.4 billion for taxpayer-supported infrastructure and $4.3 billion for the self-supported infrastructure of commercial Crown corporations and agencies.

Direct spending on health and education facilities, social housing, and government capital projects (i.e. government ministry infrastructure, including IT systems and correctional institutions) represented 46 per cent of total capital spending in 2025/26.

Spending on highways and public transit was approximately 26 per cent of total capital spending in 2025/26. While this spending was predominantly taxpayer financed, a portion was funded by the federal government and other external sources.

Spending on power generation and transmission projects represented the second-largest category of capital investment spending and was fully self-supported. This spending primarily reflected BC Hydro's ongoing refurbishment and expansion of its generation and transmission infrastructure.

Taxpayer-Supported Capital Spending

In 2025/26, government spending on taxpayer-supported infrastructure was $4.0 billion lower than forecast in Budget 2025, due to refinements to project planning and construction schedules.

Education facilities spending, which includes both the K-12 and post-secondary sector, was $466 million lower than budget, primarily due to slower than anticipated progression on self-funded projects by post-secondary institutions and projects under construction, including the Centre for Clean Energy and Automotive Innovation.

Health facilities spending was $1.9 billion lower than budget, primarily due to slower than anticipated spending on major projects under construction, including the Royal Columbian Hospital Redevelopment, New St. Paul's Hospital and the Quw'utsun Valley Hospital/Quw'utsun Hulitun-ew't-hw (formerly Cowichan District Hospital Redevelopment).

Highways and public transit spending was $1.2 billion lower than budget, primarily due to slower than anticipated progression on the Surrey-Langley SkyTrain and Highway 1 Fraser Valley Corridor Improvements projects, as well as ongoing highway and side-road upgrades, and higher than anticipated federal recoveries that offset provincial spending.

Social Housing, Ministry and Other spending was $463 million lower than budget, primarily due to slower advancement of housing development projects, and delays in the upgrade and maintenance of core government assets.

The above scheduling and cash flow changes do not represent a reduction in capital spending. Some projects have progressed slower than anticipated which has resulted in a shifting of planned capital spending to future years within the provincial capital plan.

Table 2.6 Capital Spending