Québec Budget 2025: Belt-Tightening Measures in the Context of a Tariff “War”

The seventh budget tabled by Éric Girard, the Québec Minister of Finance, was drafted under different circumstances compared to last year.

The protectionist measures already adopted by our U.S. “allies” combined with those of China and the new volley of tariff measures expected as of April 2 from our neighbors south of the border led the Quebec government to unveil a budget plan that focuses on innovation and assistance for businesses. At the same time, this budget revealed limited financial leeway as a result of the uncertain economic environment. This budget announces belt-tightening measures with a widespread freeze on spending over five years in order to balance the budget.

Public finances in the red for at least five years

When it comes to public finances, we should bear in mind that the plan to return to a balanced budget was delayed in the 2024 Budget, with a view to being tabled in the current budget. Accordingly, the 2025 Budget forecasts a return to a balanced budget within five years, by 2029–2030. However, achieving this objective may be difficult in light of the economic upheaval, particularly since the baseline scenario hinges on the assumption that 25% U.S. tariffs will not apply over the long term and the budget forecasts reflect revenues that take into account a capital gains inclusion rate of 66.66% as of 2026.

For the 2024–2025 financial year which will come to an end in a few days, the anticipated deficit is now $10.4B which is lower than the previous record of $10.9B anticipated in both the 2024 Budget and last November’s economic update. However, this deficit will increase further in 2025–2026 to a record total of $13.6B, after payment to the Generations Fund, whereas it was forecast at $9.2B in November 2024 for the same period. Ultimately, a surplus of $101M is forecast by 2029–2030 under the baseline scenario.

A focus on innovation and supporting businesses…

This budget is primarily focused on measures aimed at promoting wealth creation in Quebec. This approach is intended as a response to a slower economy resulting from the economic uncertainty that worries business leaders and tariff measures that will hinder the growth of many economic drivers, including our SMEs.

Among the measures announced, a total of $5.4B over five years has been earmarked to support and boost the Quebec economy, increase the ability to innovate and consolidate regional contributions to wealth creation. This includes:

… while continuing to improve health and education services

In this budget, the government is devoting more than $6.8B over six years to health and education services. A sum of $3.9B will be earmarked for health and social services; $2.2B of this amount will be used for funding new pharmaceutical treatments in hospitals, for deploying new health care and social services facilities and for training more doctors. This is supplemented by a sum of $1B, allocated to the following purposes:

• meeting the growing needs in youth protection;
• providing additional accommodation support to vulnerable individuals who require special support;
• providing assistance to young people leaving youth protection centers and to people experiencing homelessness who benefit from the Rent Supplement Program;
• increasing funding for community organizations;
• consolidating the mixed practice of psychosocial interventions and community policing, and
• entrenching support for Indigenous clienteles by supporting the implementation of cultural safety in the health services network.