Quebec’s government has tabled a restrained budget with a lower-than-expected $8.6-billion deficit, aiming to bolster the province’s economy amid trade headwinds and geopolitical tensions, months ahead of a fall election.
Quebec Budget Highlights Reduced Deficit
Quebec Finance Minister Éric Girard says he has delivered a “responsible, sober and targeted” fiscal plan at a time of uncertainty. The budget was presented in the National Assembly on Wednesday, weeks before the governing Coalition Avenir Québec is set to choose a new leader following Premier François Legault’s resignation in January.
This year’s fiscal plan contrasts sharply with the CAQ’s 2022 pre-election budget, which included $500 cash payments to taxpayers.
The budget highlights a reduced deficit and a commitment to return to balance by the end of the decade. Conflicts in Ukraine and the Middle East, increased protectionism, and the rise of artificial intelligence have created a “climate of uncertainty” that is dampening investment and global trade, according to Girard.
The coming renegotiation of the United States-Mexico-Canada Agreement (USMCA) is considered the “most important risk facing Quebec’s economy,” with the province particularly vulnerable to U.S. tariffs, especially on aluminum.
Investment and Support for Key Sectors
The budget plan includes $1.7 billion in new spending to support Quebec businesses and transform the province’s economy. The government aims to stimulate business investment in sectors like defence and manufacturing, and provide new support for the forestry sector.
A $2.5-billion fund for critical and strategic minerals, essential to the defence and aerospace sectors, is also being created.
Véronique Proulx, president of the Quebec federation of chambers of commerce, stated that the budget commitments “aren’t to the level that was needed” to help companies affected by trade disputes and the crisis in the Middle East. The organization had advocated for a reduced tax burden for businesses.
Investments in Childcare, Housing, and Public Services
The budget pledges to convert 5,000 non-subsidized child-care spaces into subsidized spaces by 2027, costing nearly $850 million. It also allocates $741 million to build 1,000 affordable housing units, as part of a $3.6-billion envelope to help Quebeckers cope with the rising cost of living.
Quebec plans to begin automatically filing income-tax returns for some low-income residents, mirroring the federal government’s approach.
The government has budgeted $4.3 billion in new spending on health care, education, and public safety, and $5 billion in new infrastructure dollars over six years.
The projected $8.6-billion deficit, equivalent to 1.3 per cent of GDP, includes deposits into a debt-repayment fund. The 2025-26 deficit was revised down to $9.9 billion, from $12.4 billion projected last fall.
The government remains committed to balancing the budget by 2029-30. The fiscal plan assumes stable tariff rates and a temporary rise in oil prices due to the conflict in the Middle East, projecting real GDP growth of 1.1 per cent in 2026.
However, the budget outlines potential scenarios: a recession could occur with increased tariffs, U.S. withdrawal from USMCA, or a prolonged oil shock. Conversely, a renegotiated trade agreement with the U.S. could stimulate economic growth.
Opposition parties criticized the plan as disconnected from the priorities of Quebeckers, citing concerns about the high cost of living and access to public services. Liberal Leader Charles Milliard described the budget as lacking “vision and ambition,” and noted the nearly $10-billion deficit for 2025-26 was “not a cause for celebration.”
The opposition also questioned a $250-million-a-year fund reserved for the priorities of the future CAQ leader, calling it irresponsible.
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