Caution Over Ambition: Québec’s final pre-election budget presents restraint

The CAQ Government presented the annual budget last Wednesday, and at moment of significant political and economic uncertainty, its cautious tone reflects both. With the Finance minister operating under a “caretaker government” following Premier François Legault’s resignation, and global instability weighing on growth, this year’s fiscal plan breaks from the traditionally ambitious nature of pre-election budgets. Instead, it offers a restrained approach shaped largely by the province’s limited financial flexibility.

At the core of the budget is a continuing struggle to restore fiscal balance. While the projected deficit has improved from last year’s record $13.6 billion to $8.6 billion, it remains substantial. Government spending is expected to reach $170.8 billion against revenues of $166.5 billion, with a return to balance still targeted for 2029–2030. However, that objective is increasingly uncertain, as the budget provides little detail on how it will be achieved in concrete terms.

The budget’s moderation is arguably less a strategic choice than a reflection of fiscal reality. Years of elevated spending, a growing public sector workforce, and costly collective agreements have placed sustained pressure on public finances. At the same time, several economic initiatives have not delivered the anticipated results, further limiting the government’s capacity to introduce new measures in this budget. The result is a government heading toward an election with a multi-billion-dollar deficit, a stark contrast to the surpluses it inherited when it came to power in 2018.

Economic conditions further constrain the province’s outlook. Growth is projected at a modest 1.1% in 2026 and 1.4% in 2027, reflecting ongoing global uncertainty, rising protectionism, and trade tensions. The inclusion of an $8 billion contingency provision over five years highlights the degree of caution guiding the government’s planning. These conditions, combined with emerging pressures such as a potential energy crunch, leave Québec more susceptible to external shocks.

Politically, the budget reflects a government in transition. With a new CAQ leader and premier yet to be selected, the focus is on maintaining continuity rather than introducing new policy directions. In that sense, the document presented by Finance Minister Eric Girard serves as a caretaker budget, aimed at ensuring stability in the short term and reassuring financial markets, rather than setting out a bold long-term vision.

All that considered, the budget contains a few notable inclusions. The government has set aside $1.3 billion over five years for the commitments of the premier-to-be, alongside continued investments in maintaining public infrastructure, particularly in the healthcare sector. There are also targeted measures for industries facing external pressures, such as forestry, and modest support for cultural initiatives. However, these measures remain limited in scope and do not significantly shift the province’s overall economic trajectory.

Ultimately, the budget raises more questions than it answers about Québec’s fiscal future. While the deficit is narrowing, the path back to balance remains unclear, relying heavily on cautious assumptions rather than a detailed plan. In contrast to the bold promises often seen before an election, this budget is defined by its restraint—serving primarily to hold the line until a new government is in place and prepared to make the more difficult—and perhaps bold—decisions ahead.