Budget 2026 Mentions EU Co-operation, But Not Much Money

Speaking to the European Parliament in Strasbourg on September 17, Prime Minister Carney argued that Canada and the EU “should build on each other’s strengths – deliberately, systematically, and rapidly.”

And then they moved rapidly. Less than two months later, Carney was in Montréal with European Commission President Ursula von der Leyen and other senior EU figures.

The October 30th Canada-EU joint statement after the Montréal summit lays out an ambitious plan for expanding long-term cooperation. 

If you were expecting the momentum to carry forward in the 2026 federal budget, you might be underwhelmed. Budget 2026 mentions many of the same plans, but it allocates little funding to carrying them out.

The budget’s language is, if anything, more ambitious than the summit communiqué. 

The budget says Canada and the EU will “work together in the coming months to make Canada the European Union’s first Associate Member.” The joint statement is more cautious. It commits only to defining, by next year’s summit, “an ever-closer association of Canada to the EU, short of full membership.” 

The budget does give some new funding in defence. It proposes $61.9 million over four years, plus $109.2 million in later years, for Global Affairs Canada to support Canadian companies’ participation in procurement under the EU’s Ukraine Support Loan. In effect, this opens Ukrainian defence procurement to Canadian defence companies. The budget also proposes $7.6 billion over five years for the extension and expansion of Operation REASSURANCE, Canada’s NATO mission in Eastern Europe and a key part of its commitment to European security. But that money comes from existing defence resources rather than new funds. 

The budget also includes up to $2.5 billion in Export Development Canada financing for De Havilland’s Alberta plant to expand waterbomber production to help European partners fight wildfires. But this money was announced at the summit less than a week before the budget, and it is a loan facility, not spending.

Some of the summit’s measures don’t need much money. The Canada-EU Digital Trade Agreement and the updated Competition Agreement are legal texts to be negotiated. Canada’s participation in Security Action for Europe (SAFE) draws on an EU-funded loan facility. The Defence, Security and Resilience Bank, to be headquartered in Canada, is a separate initiative with some EU member states rather than with the EU itself. That these get no dollar figures is unsurprising.

The more telling gaps are in the plans that will need money. Exploratory work on a Canada-Europe undersea data cable gets no specific funding. Neither does access to the EU’s Galileo satellite navigation system. The same goes for expanding Canada’s participation in Erasmus+, the EU’s education and exchange program, and for payments interoperability and critical minerals stockpiling.

Then there are the ideas in the joint statement that the budget doesn’t mention at all. These include Canada’s participation in Horizon Europe and the EuroHPC supercomputing initiative, modernizing the Canada-Euratom Nuclear Cooperation Agreement, border and policing cooperation through Frontex and Europol, a next-generation Youth Mobility Partnership, new dialogues on climate security, and the summit’s new AI commitments.

So many exciting plans, and so little detail or funding to support them. It is important to note that in his Strasbourg speech, the Prime Minister highlighted the need to move “deliberately” and “systematically” as well as “rapidly.” Moving deliberately and systematically takes time, and doing things right may require months or years of deliberation. 

But until now the rhetoric around the Canada-EU partnership has been marked by urgency, decisive action and clarity. Talk of a partnership was quickly followed by the Prime Minister’s address to the European Parliament and then by the extensive plans coming out of the summit. Given that pace, we might have expected the budget to put more money behind the next stage of the alliance.

As it stands, we will have to wait until at least the Spring Economic Update for a chance to see more funds allocated to the Canada-EU plans. 

But hey, at least we have Eurovision to look forward to in 2027. Canada’s participation in the iconic music contest was actually announced in last year’s budget. So these things do come to fruition, eventually.