Quebec’s Political Reset: Risks, Resilience, and the Road Ahead
Like many jurisdictions who are confronted with domestic challenges and growing global instability, Quebec voters delivered a fractured political verdict last night.
In the 127-seat National Assembly, the Parti Québécois (PQ), led by Paul St-Pierre Plamondon, will form a minority government with 59 seats, five short of the 64 required for a majority. The Liberals (PLQ), under Charles Milliard, will form the Official Opposition with 40 seats. The Conservative Party of Quebec (PCQ), led by Éric Duhaime, gained 19 seats, while Québec solidaire (QS), led by Ruba Ghazal, won nine.
The most striking result, however, is the complete collapse of the Coalition Avenir Québec (CAQ). After winning a commanding majority of 90 seats in 2022, the party failed to elect a single member and saw its leader step down. The fragmentation of the National Assembly is also reflected in the popular vote with the PQ winning only 28% of the vote.
Quebec’s response to an increasingly unstable environment, in other words, appears to be more political instability. The province now has something resembling a European-style parliament, a development that may serve either as a model or a warning for proponents of proportional representation.
Quebec’s response to an increasingly unstable environment, in other words, appears to be more political instability. The province now has something resembling a European-style parliament, a development that may serve either as a model or a warning for proponents of proportional representation.
Paradoxically, that instability may offer some reassurance to the rest of Canada. With a clear minority in the legislature and only a limited share of the popular vote, the PQ would face significant obstacles in attempting to organize, let alone win, another referendum on Quebec independence. Even support from the small number of sovereigntist Quebec solidaire members would not fundamentally alter that arithmetic.
The Greater Risk Lies Elsewhere
Historically, when the PQ has lacked the political conditions necessary to advance sovereignty directly, it has often sought to sharpen conflicts with Ottawa and frame them in terms of Quebec’s humiliation, domination, or distinctiveness. Individual disputes can then take on significance far beyond the underlying issue.
A forthcoming Supreme Court ruling on the preventive use of the Constitution’s notwithstanding clause could provide one such flashpoint, particularly if it touches on Quebec’s language or secularism laws. An adverse ruling could easily be portrayed by the PQ government as another attack on the “Quebec model.”
The economic consequences of renewed constitutional tension also should not be underestimated. Financial markets are accustomed to political change. They are less comfortable with uncertainty that raises questions about the stability of the country itself.
If a referendum were announced and public support for independence began to rise, investors could quickly demand a higher risk premium on Quebec debt.
That could widen the spread between Quebec bonds and those issued by other Canadian governments, increasing borrowing costs with direct consequences for households, businesses, and the provincial treasury. In today’s already unsettled bond markets, this is hardly a theoretical concern.
Quebec’ Structural Advantages Amid Instability
Quebec benefits from significant structural advantages, including energy. Quebec’s renewable and relatively affordable electricity is an increasingly important competitive asset, particularly as climate policy, electrification, and energy security reshape investment decisions. With recent federal-provincial agreements to expand hydroelectric capacity at Churchill Falls, that advantage has been reinforced in partnership with Newfoundland and Labrador.
The province also maintains a generous system of financial support for companies looking to invest. That model is increasingly being questioned as fiscal pressures mount and could be scaled back in the coming years. Ideally, any reduction in direct subsidies would be accompanied by a more competitive corporate tax environment.
Quebec’s fiscal position, however, has deteriorated. The CAQ returned the province to sizable deficits after a period of significant improvement under the previous Liberal government. All major parties except Québec solidaire have pledged to restore balance to public finances.
That will be easier said than done.
A return to balanced budgets will require a healthy and growing economy, particularly if the province is to meet the optimistic fiscal projections prepared ahead of the election under Quebec’s legally mandated pre-election review process. As economic conditions evolve, those forecasts appear increasingly ambitious.
Quebec nevertheless retains many of the fundamentals required for long-term prosperity: vast natural resources, strong educational institutions and a skilled workforce. Maintaining that workforce will also require a steady and well-managed level of immigration in the years ahead.
The global economy is becoming more competitive, not less. Jurisdictions are competing for natural resources, technological leadership, skilled workers and, increasingly, scarce capital.
Quebec is well positioned to compete. But its structural strengths will matter most if they are matched by political stability, credible fiscal management, and a policy environment that gives investors’ confidence in the province’s long-term direction.
Combined, those elements could provide the foundation for stronger investment and more inclusive economic growth. Without them, Quebec risks allowing political uncertainty to weaken advantages that remain very real.