Legault and his economic trio: reckless!
Last March, the Minister of Finance, Eric Girard, estimated at 25% the risk of seeing Quebec enter a recession next year. Then in June, the treasurer of the Legault government raised his recession forecasts to 35%.
And now, the outgoing Prime Minister, François Legault, assesses the risks of falling into recession in 2023 at some 50%.
Who would have thought, that the CAQ leader was going to brandish, quite simply a week before the election, the specter of a recession to encourage voters to bet on « stability » by postponing the Coalition Avenir Québec (CAQ) in power ?
There is no doubt that the risks of recession continue to increase.
The factors that “play” in favor of a recession are:
- the very sharp rise in interest rates which followed the 3 percentage point increase in the key rates of the Bank of Canada and the American Federal Reserve;
- the other key rate increases that will come into effect in the coming months in order to counter the resistance of inflation;
- increases in the price of products imported from the United States due to the devaluation of our dollar against the US dollar;
- the severe labor shortage that prevents businesses from meeting demand;
- the increasingly high probabilities of seeing the United States enter into recession, as well as Europe;
- the negative impact of the war in Ukraine on energy prices;
- supply chain issues.
Dixit François Legault: « There is a risk at the global level and a risk that has increased in recent days, and this is an additional reason to vote for the CAQ, because we need an Eric more than ever. Girard, a Sonia LeBel, a Pierre Fitzgibbon to get through. »
- Listen to Michel Girard’s economic editorial broadcast live every day at 7:50 a.m. at QUB-radio :
But why did Mr. Legault wait until the end of the election campaign to tell us about his fears of a recession when with his economic trio Girard-LeBel-Fitzgibbon, he presented a financial framework where he does not skimp? not on expenses and gifts to voters?
When we expect to enter a recession, it is better to play it safe!
In the Department of Finance’s pre-election report, Minister Girard expected to record a cumulative surplus (before money transferred to the Generations Fund) of $13.7 billion for the fiscal years from 2022-23 to 2026-27.
With his electoral financial framework, François Legault and his economic trio now forecast for the same years a cumulative deficit of $12 billion when we take into account the same parameters of budgetary provisions for unforeseen risks.
- Want more? Listen to this segment of Michel Girard broadcast live every day at 7:50 a.m. on the radio via QUB-radio :
Was it prudent for the outgoing CAQ government to embark on additional spending of some $26 billion to court voters in order to stay in power? Nope !
Given the panoply of polls which repeat week after week that the Legault government will be returned to power with a solid majority, he did not have to embark on an escalation of electoral gifts.