Big Ambitions, Tight Purse Strings: Our Analysis of the Quebec Budget 2025

The province forecasts a deficit of $13.6 billion for fiscal year 2025–26. This includes roughly $2.2 billion set aside for deposits into its Generations Fund, as required by the Balanced Budget Act.
Over the next two years, the deficit is expected to decline, reaching $5.7 billion by 2027–28.
The 2025 budget reaffirmed the government’s commitment to curbing spending growth over the next few years to attain a surplus by 2029–2030. However, this includes a cumulative $6 billion in a “gap to be bridged for achieving fiscal balance” which comes with little detail, clouding the province’s fiscal picture.
Quebec’s net debt-to-GDP ratio is forecast to reach 40.4 per cent in fiscal year 2025–26, only behind Newfoundland and Labrador. The situation is not expected to improve much over the next five years.
Between 2024–25 and 2026–27, total provincial debt is projected to grow by 15.5 per cent, pushing debt servicing costs to 6.6 per cent of expenditures.
The province estimates it recorded a deficit of $10.4 billion for 2024–25—$600 million lower than projected in its fall fiscal update. This improvement is largely due to stronger than expected revenues, primarily driven by robust consumer spending.
Quebec’s baseline forecast assumes that Canada will face an average of 10 per cent tariffs on all goods destined to the United States for a period of two years.
Similar to other provinces, this budget season, Quebec has included a contingency reserve of $2.0 billion for each of the next two fiscal years in its financial framework, with annual reserves of $1.5 billion set aside for the following three years. The reserve is to reduce effects of weaker than anticipated economic growth during this period of heightened uncertainty.
New spending will be targeted to the healthcare and education sectors. Spending on health care will rise 3 per cent in the coming year, while education spending will expand 2.2 per cent. These rates are much lower than the average from the past decade.
This budget puts greater emphasis on facing future economic uncertainty, with more spending allocated to help firms impacted by the tariffs and toward infrastructure projects.
The province is announcing $4.1 billion in assistance to businesses affected by the tariffs over a 5-year period, including $803 million for this fiscal year.
Quebec’s decennial infrastructure plan has been boosted by $11 billion, totalling $164 billion between 2025 and 2035.
Total expenditures for 2025–26 are projected to rise by 1.5 per cent compared to the previous fiscal year.
In contrast, revenue growth is expected to be more modest, increasing by just 0.7 per cent. This will be largely due to slowing economic activity.
The Quebec government projects provincial economic growth of 1.1 per cent in 2025, followed by 1.4 per cent in 2026. These figures are somewhat optimistic based on our own analysis.

Key Insights

With its latest budget, Quebec aims to leverage fiscal policy to navigate these uncertain times. Facing significant economic impacts from tariffs, the government is committed to stimulating the economy. As a result, this year’s deficit is set to reach a new high, with increased funding allocated to businesses and speeding up planned infrastructure projects. To help support this spending, the government is aiming to reduce spending growth in healthcare and education, while also keeping further new spending programs to a minimum.

Tariffs may not be as bad as originally thought, but key industries in Quebec are still being targeted. In recent weeks, the U.S. administration has shifted from imposing blanket 25 per cent tariffs on all Canadian goods along with 10 per cent tariffs on energy and potash, to a reciprocal model. Under this approach, goods from Canada and all other countries are taxed an amount equal to the average tariff they apply to U.S. products. This shift has provided some optimism that the Canadian economy may escape the worst of a trade war with the United States. However, the potential impact on Quebec’s economy is still worrying, given that President Trump has already targeted the province’s aluminum sector and has continued to threaten tariffs on lumber and dairy products. Significant tariffs on those industries will likely curb production considerably, costing Quebecers’ jobs and reducing the government’s revenues, while also increasing the need for further government support, muddying the province’s fiscal picture even more.

Uncertainty is making a difficult situation worse. Quebec has one of the highest net debt-to-GDP ratios among provinces and is forecasting a $13.6 billion deficit in the upcoming fiscal year, its steepest on record. Stringent provincial migration targets and a relatively old demography will only complicate matters by narrowing the government’s tax base while adding pressure to the healthcare system through the rest of the decade. The province is forecasting a return to balance by 2030, but that is counting on strong economic growth to boost corporate profits and create new jobs, an optimistic outlook compared to our own.