Canada election preview – A reversal of fortune for the Liberals

Canada’s political fortunes have been on a rollercoaster ride since late 2024 and will culminate at the country’s Federal Election on Monday 28 April. At the turn of the year, the ever-more unpopular Justin Trudeau was still Prime Minister, and the incumbent Liberal Party was trailing the main opposition Conservative Party by over 20 points in the polls, a trend that had been in place since mid-2022.

It looked as though a new era would soon be underway after a decade of Liberal rule. But the combination of Mark Carney replacing Trudeau and US President Donald Trump turning his attention to US-Canadian relations – marked by steep tariffs and threats to its sovereignty – resulted in a staggering turn of events. Indeed, the Liberal Party’s popularity recovered and closed the gap in the polls by mid-March, a move Carney seized upon by calling a snap election for 28 April – ahead of the mandated time in October this year.

Whoever wins will inherit a challenging outlook. Domestic issues are still very much at the fore, including ongoing housing issues, tackling immigration numbers, sluggish private sector employment and weak productivity growth. But external pressures from the US - Canada’s key trading partner and ally – and growing trade tensions broader impact on global growth are currently most pressing. Together, these factors amount to a deteriorating economic environment, with elevated uncertainty already impacting Canada’s economy and growth expected to slow to a crawl in the second quarter (Q2). In this paper we examine the current polling and consider what this will mean for government formation; we run through the key main policy differences; and discuss the reality of the public finances.