(Quebec) “The next six months will be very difficult,” warns Finance Minister Eric Girard, who has revised his economic growth forecasts downward. He responded to the unions of 600,000 state employees that “the financial framework is tight”.
“Unless the economy is stronger and we have additional revenue, any additional spending is going to require borrowing,” he said at a press conference Tuesday when asked if he has any room for maneuver to further increase salaries within the framework of the renewal of collective agreements.
And for the moment, the sky is getting darker instead of brightening.
“We are not in recession, but certainly in an extremely difficult period that could be described as stagnation,” he stressed while presenting his economic update. “We are really around 0.0% growth. »
The Quebec economy will not regain its “momentum” in 2024 as he predicted in March. Real GDP is expected to grow by just 0.7% instead of 1.4%. “We are at the heart of the economic slowdown,” insisted Eric Girard.
The Minister of Finance integrated into the financial framework the government’s new offer to the 600,000 state employees: salary increases of 10.3% in five years, differentiated increases representing 3% for certain categories of workers and an amount lump sum of $1000 the first year.
The minister’s cushion for unforeseen events is only 500 million for this year. Due to the announcements of its update and the fall in tax revenues, this contingency provision has decreased considerably, going from 6.5 to 1.5 billion in five years.
In short, Eric Girard makes it known that the room for maneuver is very slim.
However, his signals seemed contradictory during the press conference. Particularly when he declared that there will be “no austerity at all” despite the low spending growth forecast for 2024-2025 (1.6%).
“We must pay attention to the growth rate of 2024-2025 expenditure while the 2024-2025 budget has not been tabled. Normally, a budget leads – at least, this is my experience – to an increase in spending,” he said.
So, would there be financial room for maneuver?
“I have made five budgets to date and the five budgets have shown that in a budget, there are initiatives and an increase in spending,” he replied.
So why might a larger wage hike for the state’s 600,000 employees not be part of this upcoming additional spending? “I didn’t say that,” he replied, before changing the subject.
Remember that the government has not qualified its new offer as final.