The Legault government’s financier, Finance Minister Eric Girard, may put on his rose-colored glasses to keep telling us that Quebec is doing relatively well economically, but many unpleasant surprises threaten to thwart his budget forecasts.
In October, Quebec lost 34,500 full-time jobs. In addition, the number of unemployed rose by 31,700.
And of all Canadians, it is Quebecers who are hit hardest by inflation in the country, with an annual rate of 4.8% last September. Meanwhile, wages are lagging behind inflation. Weekly earnings rose 3.07% from September 2022 to September 2023, 1.7 percentage points below the consumer price index.
More and more households in Quebec are unable to make ends meet.
Even worse. SMEs, the economic engine of Quebec, face an incredible number of difficulties today: inflation, financial pressures, labor problems and insecurity.
At a rate of just 46.1%, SME owner confidence in Quebec is the lowest in Canada, according to the latest data from the Canadian Federation of Independent Business (CFIB). “The optimism has been far from there for many months. This situation worries us and should alert the Minister of Finance and encourage him to act from the next economic update and in his next budget,” explains François Vincent, Quebec vice-president of the CFIB.
But armed with his crystal ball, the finance minister remains optimistic: “If we look at all the economic data, they will be positive and therefore there is currently no recession in Quebec.”
TO BE REVISED DOWNWARDS
I look forward to seeing in today’s economic update whether the Minister will revise downwards the March 2023 economic outlook on which he based his new 2023-2024 Budget.
In terms of real GDP, he expected growth of 0.6% in 2023 and 1.4% in 2024. For comparison: Desjardins economists are significantly less optimistic, predicting an increase in real GDP of just 0.3% in 2024 Year 2023 and 0% in 2024. For their part, economists at National Bank Financial forecast an increase of 0.5% in 2023 and also 0% in 2024.
Another example of a significant gap between the forecasts of Minister Girard and, for example, the economists of Desjardins. Regarding housing starts, the Legault government forecasts 50,100 in 2023 and 46,200 in 2024. Desjardins economists, for their part, reduce the number of housing starts to 38,100 in 2023 and 39,000 in 2024.
LESS INCOME, MORE EXPENSES
In the report on Quebec’s financial situation for the first three months of the 2023-2024 fiscal year, Minister Eric Girard made it a point to revise its independent revenues downward by a billion dollars due to the observed economic slowdown. However, there was no change in the forecast deficit (1.6 billion) due to the “provisions for unforeseen expenses” included in the budget.
However, the series of new measures that the Legault government will announce in today’s update are likely to force the minister to revise his spending upwards. And also the deficit for the current financial year.
To the new expenses must also be added the unforeseen amounts that the Legault government will add to the salary increases for the 560,000 public servants.
