Setting the scene
On November 25, Quebec’s Minister of Finance, Eric Girard, tabled the annual fall economic and fiscal update, Protecting our purchasing power and our economy, in the National Assembly.
The economic update comes at a politically challenging time for Premier François Legault and the Coalition Avenir Québec (CAQ) government, both of which are facing growing pressure from multiple fronts. From the economic challenge of the continued trade dispute with the United States, to controversial legislation regulating doctors that has sparked some internal divisions and prompted multiple resignations over the last few months including, former Social Services Minister Lionel Carmant and former Minister of Natural Resources and Forests Maïté Blanchette Vézina.
The CAQ has faced a significant decline in public support over the past year, and even though they have seen a small upward trend in the polls since mid-September, the reality remains that should an election be held today polling shows the CAQ would be projected to win 3 seats with a popular vote of 17%. The Parti Québécois would be projected to win a majority government with 33% of the popular vote and 72 seats, while the Quebec Liberals would be expected to form the official opposition with 39 seats and 26% of the popular vote, despite their own internal challenges. Liberal Leader Pablo Rodriguez has been at the centre of controversy in the past weeks, as he confirmed to the Assembly that federal Liberal MP Fayçal El-Khoury solicited donations for his leadership campaign, while Mr. El-Khoury denied having any connection to the campaign. Saint-Laurent MNA Marwah Rizqy found themselves at the beginning of what would be a hectic few weeks for the QLP, after firing her chief of staff, who happened to be a close associate of the Liberal leader led to her suspension from caucus and her role as parliamentary leader. The trouble continues as a conversation between Rizqy and Mr. El-Khoury that happened on November 14 is reportedly now being investigated by Elections Quebec because of a possible link to Pablo Rodriguez’s leadership campaign.
While the government has promised swift action on modest financial relief measures for Quebecers, with less than a year until the next scheduled provincial election next fall, the challenge of climbing out of this public opinion deficit becomes more urgent. However, the opposition will also need to ensure they have their own parties in order if they have any hope of leading the province come next fall.
The economic update comes just weeks after Premier Legault released his economic vision for the province, Quebec Power, where he outlined in detail his government’s plan to protect Quebec’s major industries and the economic interests of the province by focusing on: Renewable Energy, Efficiency in Realizing Strategic Projects, Interventionist Investments, the Green Transition, Data Centres, Security and Defence, and Critical and Strategic Minerals, all of which Premier Legault indicated will be priorities moving forward in the legislative session.
Yesterday’s economic update is the third iteration of the government’s plan to protect the province from external trade factors. The process began earlier this year when Finance Minister Eric Girard tabled the provincial budget, which acted as the government’s initial response to the uncertainty Quebecers and businesses were facing due to U.S. tariffs. The Fall Economic Statement builds on the goals of these two previous announcements, while refocusing specifically on the importance of protecting the purchasing power of Quebecers facing increases in the cost of living and supporting Quebec businesses to increase their economic resilience.
Highlights
Yesterday’s update on Quebec’s Economic and Financial Situation announced investments totalling $2.1 billion over the next five years to address Quebecers’ priority issues. In an effort to cut costs, there will be a reduction of $3.4 billion in government tax expenditures over the next five years.
Initiatives totalling $2.5 billion are planned to stimulate business investment, reduce employers’ social security contributions, promote economic development in the regions, and create research chairs in areas of strategic importance to Québec.
- $400 million over five years for promoting economic development in the regions, which face a number of challenges, particularly related to tariffs.
- $290 million will be invested to support the agriculture, forestry and fishing sectors by providing businesses with a $255-million temporary payroll tax holiday.
- $10 million is also earmarked to create 10 research chairs in areas of strategic importance.
- The government is cancelling the increase in the capital gains inclusion rate, following the decision of the federal government on this matter. This cancellation represents a gain of more than $2 billion for Québec citizens and businesses.
The accelerated depreciation measures that were implemented in 2018 will be extended for a further five years.
Minister Eric Girard announced plans to help workers save $1.8 billion over the next five years through a reduction of contribution rates to the Quebec Pension Plan (QPP) and Quebec Parental Insurance Plan (QPIP).
The personal income tax system and social assistance benefits will both be indexed by 2.05% as of January 1, 2026, representing tax relief of $4.1 billion over 5 years.
The government will use the $1.8 billion surplus that is currently held within the Electrification and Climate Change Fund—often referred to as the “Green Fund”, which was originally established as a means for future generations to tackle climate change—to pay down the province’s overall debt burden. The surplus will instead go toward Quebec’s generations fund in 2026-27, which Minister Girard says will contribute to generational fairness and offer long-term flexibility.
Despite rumours, the financial update did not include a reduction in gas taxes.
Government priorities
The Quebec government is entering a decisive period in the National Assembly, with several pieces of legislation under review and others expected to be tabled in the coming two weeks.
As of December 2, and lasting until December 12, the Assembly will enter the “intensive sitting period” which is a period of extended sitting which often allows for governments’ to pass key legislation over a shorter period of time. The CAQ is expected to advance an ambitious agenda that touches on constitutional reform, secularism, discoverability of French-language cultural content, fiscal measures and reducing debt. Here are some bills to watch in the upcoming weeks.
- Bill 99 gives effect to fiscal measures announced in the Update on Québec’s Economic and Financial Situation presented on November 21, 2024, and in the Budget Speech delivered on March 25, 2025.
- Bill 1, the Quebec Constitution Act 2025, proposes the adoption of Quebec’s first constitution. It would unilaterally amend the Canadian Constitution, abolish the lieutenant-governor, and require that Senate and Supreme Court appointments be made on the Quebec government’s recommendation.
- Bill 109 gives effect to measures requiring digital platforms operating in Quebec to enhance the discoverability and promotion of French-language cultural content available to users in the province.
- Bill 396 gives effect to the government’s debt-reduction framework by incorporating an Act to reduce public debt and establish the Generations Fund, providing for its capitalization to reach $100 billion.
- Bill 112 gives effect to measures aimed at facilitating interprovincial trade and labour mobility by reducing barriers to the movement of goods and workers between Quebec and the other provinces and territories of Canada.
- The “Secularism 2.0” Bill will update the government’s secularism framework, expanding rules from previous legislation—Bill 21 and Bill 94—and will pre-emptively invoke the notwithstanding clause.
Key numbers
The economic statement showed that growth has slowed due to the impacts of U.S. tariffs. As a result, businesses have struggled with uncertainty and higher costs that ultimately increase the risk of investment in the province and have weakened their competitiveness. In 2024, the province saw a gain in real GDP of 1.7% and now, under the assumption of an average tariff rate below 10%, real GDP is expected to grow by 0.9% in 2025 and 1.1% in 2026. Previously, predictions in the 2025 Budget had forecasted real GDP growth of 1.1% in 2025 and 1.4% in 2026.
The unemployment rate rose from 5.3% in 2024 to an average of 5.7% in 2025. It is projected to average at 5.6% in 2026 due to a combination of tariff-related effects, slow demographic growth, and decreasing immigration.
The province has maintained its commitment to restore fiscal balance by 2029-2030 and projections for 2025-2026 show revenue amounts of $158.7 billion and expenditure amounts of $166.6 billion. These are projected to growth by 3.7% and 1.9% respectively in 2026-2027.
The deficit is projected to be $12.4 billion this fiscal year, down from the $13.6 billion announced in the last budget. This includes the mandated allocation to a fund dedicated to paying down debt. Without that transfer, the province’s deficit is forecast to be $9.9 billion, down from the $11.4 billion projected in March.
In 2026, Quebec’s net debt will be $254.6 billion, or 39.7% of GDP. The net debt to GDP ratio is expected to grow to 41.3% in 2028 due to large, planned investments in infrastructure, then resume its downward trend. The forecast updated the 2025-2026 deficit to sit at $12.4 billion, $1.2 billion less than the $13.6 billion projected last year.
Conclusion
This fall economic update underscores the government’s current challenge: protecting households and businesses from external pressures while maintaining fiscal discipline. It includes investments aimed at strengthening regional development, supporting sectors that are strategic priorities, and easing the financial burden for Quebecers.
Of course, it’s efficacy will be up for debate and contested by the opposition parties. Liberal Leader Pablo Rodriguez described the $12.4 billion deficit as historic, and questioned the fiscal management of the CAQ government, while also highlighting that aid for the forestry sector was insufficient. Québec Solidaire echoed the same criticism that the fiscal relief for Quebecers didn’t amount to anything of significance, and despite this the government was abandoning its fight against climate change by diverting funds from the ‘Green Fund’ to pay down its own debt. The Parti Québécois raised similar concerns, while also emphasizing excessive business subsidies, growing bureaucracy, delayed infrastructure projects, and insufficient funding for homelessness.
As the Assembly enters its final two weeks of sitting, with extended hours for the government to pass important legislation before the holiday break, Premier Legault will use this time to try to refocus his government and show Quebecers that the CAQ is the party with their best interests in mind. Whether it is on social policy, economic relief or the cost of living, the CAQ still faces a significant hill to climb as the province moves quickly towards next fall’s election. Moreover, it seems the question is more likely how opposition parties can best capitalize on the opportunity presented by a struggling government that is navigating difficult waters both economically and socially.
Connect with our experts to find out more about how they might do this, how Premier Legault may try to turn things around in the coming months and what this means for businesses and Quebecers alike.
