In a move that underscores the province’s current economic uncertainties, Quebec Finance Minister Éric Girard unveiled a notably restrained budget on Wednesday, projecting an $8.6 billion deficit. This fiscal plan, described by Girard as “responsible, sober and targeted,” aims to bolster the province’s economy amidst looming trade challenges and geopolitical tensions. With a fall election on the horizon, the budget reflects a stark shift from previous election-centric spending, focusing instead on stability as the governing Coalition Avenir Québec (CAQ) prepares for leadership changes following Premier François Legault’s resignation earlier this year.
A Deficit with a Purpose
The anticipated deficit, representing 1.3 per cent of the province’s GDP, is considerably lower than earlier estimates. Girard highlighted that the budget includes provisions for significant investments aimed at stimulating Quebec’s economy, particularly in sectors deemed vital for future growth, such as defence and manufacturing.
While last year’s budget was characterised by cash payments to taxpayers—a strategy heavily critiqued by opposition parties—this year’s proposal lacks such populist measures. Instead, it outlines plans for a return to budgetary balance by the end of the decade, a target that will be closely monitored amid fluctuating global economic conditions.
According to Girard, the combination of ongoing conflicts in Ukraine and the Middle East, as well as increasing protectionism and the rise of artificial intelligence, have created a “climate of uncertainty” that is hindering investment and trade. He specifically pointed to the upcoming renegotiation of the United States-Mexico-Canada Agreement (USMCA) as a crucial factor that could significantly impact Quebec’s economy, particularly given the province’s vulnerability to U.S. tariffs on aluminium.
Investments in Key Sectors
The budget allocates $1.7 billion in new spending dedicated to supporting businesses and transforming the province’s economy. This includes the establishment of a $2.5 billion fund aimed at critical and strategic minerals, essential for the defence and aerospace industries. However, business leaders, such as Véronique Proulx, president of the Quebec federation of chambers of commerce, have voiced concerns that the budgetary commitments fall short of what is necessary to effectively support companies grappling with the trade dispute with the U.S. and ongoing crises abroad.
In a bid to address pressing social issues, the government has committed nearly $850 million to convert 5,000 non-subsidised childcare spaces into subsidised ones by 2027 and earmarked $741 million for the construction of 1,000 affordable housing units. These initiatives form part of a broader $3.6 billion package aimed at helping Quebeckers cope with the rising cost of living.
A Vision for the Future?
Although the budget outlines an ambitious fiscal path, it still assumes a stable economic environment, including consistent tariff rates and temporary oil price fluctuations. With real GDP growth projected at 1.1 per cent for 2026, the government is optimistic about the future, yet Girard acknowledged that adverse scenarios—such as a hike in tariffs or a prolonged oil crisis—could derail these plans.
In response to the budget, opposition parties have raised concerns about its disconnect from the realities faced by many Quebeckers, particularly regarding the soaring costs of housing and food, along with inadequate access to public services. Liberal Leader Charles Milliard described the plan as lacking vision and ambition, criticising the projected deficit of nearly $10 billion for 2025-26 as anything but a cause for celebration.
Furthermore, questions have been raised about a $250 million annual fund allocated for the priorities of the incoming CAQ leader, which some critics have labelled a “credit card” for the next premier, suggesting an irresponsible use of public funds.
Why it Matters
This budget, being potentially the last from the current CAQ government, offers a glimpse into how the party intends to navigate Quebec’s economic landscape amid looming elections. As the province braces for a leadership change, the cautious approach in fiscal planning reflects a broader strategy of stability over short-term gratification. Facing mounting criticism from opposition parties and business leaders alike, the effectiveness of this budget will ultimately be measured not just in numbers, but in its ability to resonate with the everyday realities of Quebeckers. With economic uncertainties ahead, the province’s ability to balance fiscal responsibility with the needs of its citizens will be under the spotlight in the coming months.
