In a significant turn of events, Quebec's Finance Minister Eric Girard unveiled the province's 2025-2026 budget on March 25, 2025, forecasting a staggering $13.6 billion deficit, with a strategic focus on economic resilience in light of proposed U.S. tariffs.
The budget, totaling $165.8 billion, is framed as a response to the growing economic pressures exerted by the administration of U.S. President Donald Trump. Girard stressed the need to “respond with strength” to this looming threat, even if it means increasing the province's debt, stating, “It’s manageable. We’re dealing with it. We have the responsibility to respond to the uncertainty, to support businesses.”
The projected $13.6 billion deficit represents a significant increase from the previous year when Quebec managed to reduce its deficit from an initial projection of $11 billion to $10.4 billion due to better-than-expected economic performance. Girard indicated that the government’s approach aims at stimulating wealth creation and supporting Quebecers through various investments, including $12.3 billion over the next five years to help businesses innovate and diversify their market reach away from the U.S.
Additionally, the government plans to tackle these challenges head-on by implementing several economic measures. Girard reported that nearly $4.1 billion would specifically aid businesses impacted by tariff threats, enabling them to adapt and thrive despite external pressures. However, increased spending targeting economic recovery naturally raises concerns about sustainability, with opposition voices questioning the government's fiscal management strategies.
Critics like Parti Québécois Leader Paul St-Pierre-Plamondon accused the Coalition Avenir Québec (CAQ) government of weaponizing external pressures as a smokescreen for its financial shortcomings. “All that counts,” he remarked regarding the fiscal management under CAQ, “that brings us to a structural deficit that is very uncomfortable for the future of Quebec.” Liberal finance critic Frédéric Beauchemin dubbed the leadership the “kings of the deficit,” highlighting a growing sentiment that though deficits are rising, essential services are decline.
Despite this criticism, Girard asserted that the government is committed to investing in public services, announcing an increase in expenditures. The budget allocates $65.5 billion to health and social services—a three percent increase compared to the previous fiscal year—and $23.5 billion for education, marking a 2.2 percent rise. He promotedd their stability by suggesting that “this budget is not just about numbers—it's about improving lives.” However, some experts noted that such increases merely maintain pace with inflation, leaving many of these budgets essentially stagnant.
Girard's optimism amid potential economic turmoil is reflected in his forecasting around American tariffs, projected to average 10 percent and remain effective for two years. Nevertheless, he cautioned that if the Trump administration follows through on its steep threats of up to 25 percent tariffs, this could result in Ontario-like recession scenarios, with severe negative ramifications for the Quebec economy. He urges the necessity for targeted actions and disciplined measures to mitigate these impending challenges.
To sustain its fiscal health, Quebec has identified a need for systemic changes, including reassessing tax codes with a forecasted earning increase of $3 billion over five years. These adjustments include raising the insurance tax from nine percent to 9.975 percent and eliminating lesser-used tax credits. These measures signal a strategic pivot to bolster state revenues while remaining attentive to the economic landscape.
Looking ahead, Girard is resolute in forecasting a balanced budget by 2029-30, suggesting that achieving this requires aggressive cuts—about $2.5 billion in administrative spending and strategic public procurement shifts in favor of local businesses to stimulate economic activity. However, he maintains that next fiscal periods could still be marred with deficits as the strain of lower revenues due to tariffs weighs heavily on the province’s taxpayers.
As part of its cultural strategy, the Quebec government has set aside $717 million to support the French language and the province's identity. This includes a vast allocation for heritage and culture, focusing on helping artists and engaging diverse communities within Quebec.
Girard’s budget announcement encapsulates not just figures, but a call for resilience amid adversity, emphasizing that Quebec must work together to stand strong against external pressures while fostering growth within. He ends his speech on a note of hope, stating, “The transformation of our economy must be treated as an opportunity for innovation.” Quebec stands at a crossroads, facing daunting challenges through increased deficit measures and demanding fiscal responsibility for a robust comeback.
