A general election held on October 19, 2015, following the longest election campaign in more than 140 years, produced a wholly unexpected result, as the Liberal Party, which had been running third in the polls when Prime Minister Stephen Harper fired the starting gun on the campaign back in early August, not only won the election, but secured an outright majority of seats in the expanded 338-member Parliament. Numerous factors played a role in the outcome, but perhaps the simplest explanation is that Canadian voters were ready for a change after nine years of Conservative rule, and NDP leader Tom Mulcair failed to convince voters that he would be a more effective agent of change than his youthful Liberal counterpart, Justin Trudeau.

As for what change will mean in practical terms, the new government’s agenda is consistent with the approach of the Liberal administrations that governed from 1993 until defeated by Harper and the Conservatives in 2006, which entailed the maintenance of a business-friendly fiscal and investment framework, along with a commitment to ensuring a strong social safety net and the imposition of regulatory restrictions in the public interest.

The Liberals are planning to run fiscal deficits equivalent to somewhat less than $8 billion in 2016–2018 in order to create room for a doubling of spending on infrastructure investment as a means of stimulating economic growth. Although the new government plans to raise taxes on the very wealthy, Trudeau has pledged that the corporate tax rate will be held at the current level and that the government will produce balanced budgets beginning in 2019.

The early indications suggest that the election outcome has had a net positive effect on market sentiment, with relief that investors will not have to deal with the uncertainty associated with a hung Parliament outweighing concerns about exactly how Trudeau might make use of his majority. The Liberals’ proposal to boost infrastructure spending has at least temporarily eased concerns that an anticipated sharp slowdown in the housing market might lead to large-scale layoffs in the construction industry that would compound the economic weakness resulting from a steep decline in commodity exports.