Minister of Finance Brenda Bailey tables her first budget in the legislative assembly at legislature in Victoria, on March 4.CHAD HIPOLITO/The Canadian Press
The B.C. government has tabled a budget that predicts the province’s economy will ride the edge of a recession in an uncertain year ahead defined by U.S. tariffs.
The budget documents, released Tuesday, were based on forecasts that were out of date even before they were released because they did not include the impact of U.S. tariffs, forcing the Finance Ministry to come up with new economic assumptions as recently as February.
Even those projections could change, Finance Minister Brenda Bailey acknowledged just hours after the U.S. tariffs of up to 25 per cent on goods from Canada and Mexico took effect on Tuesday.
“This is a range. Other things could happen,” she said.
The province is bracing for a difficult road ahead, with an expectation of tens of thousands of job losses, rising inflation, growing provincial debt and declining corporate profits. Ms. Bailey said the government’s priority in this budget was to protect needed public services.
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The $95-billion budget includes $4-billion in contingency funds to deal with uncertainties, and the Finance Minister said the government could bring in budget changes later in the year if needed.
“This is not a budget that has splashy new announcements,” she said. “Budget 2025 is about standing strong for B.C. and making sure public services are there when we need them.”
Without the U.S. tariffs, the government forecast a record deficit of $10.9-billion based on modest economic growth of 1.8 per cent. But those estimates, included in the budget documents, were written before the tariffs were confirmed.
With the tariffs in place as of Tuesday, the new assumptions expect the B.C. economy to grow by 0.3 per cent in the coming fiscal year. That figure assumes expected relief from Ottawa and lower interest rates.
The deficit is unknown, but the provincial revenues could fall by as much as $3.4-billion annually.
Finance officials estimate that there will be 45,000 fewer jobs in the province by the time U.S. President Donald Trump’s four-year term ends, and the economy will have contracted by 2.6 per cent by 2029.
Even those predictions are highly uncertain: “The potential outcomes presented here should be considered with the broader context of a fluid and evolving global trade policy environment,” the budget cautions.
B.C. relies less on the United States for trade than most Canadian provinces, with a little more than 52 per cent of the province’s exports last year heading south of the border. That compares with 88 per cent for Alberta’s goods, and an average of 76 per cent for goods from Ontario and Quebec. To make B.C. more self-sufficient, the province is looking for new markets both overseas, and across Canada.
Unlike recent budgets in Alberta and Nova Scotia, the B.C. government is offering no personal tax cuts. Instead, the province is increasing spending by $2.9-billion this year on core services: social programs, public safety, health care and education.
The Insurance Corp. of B.C. will provide $110 refunds to people with vehicle insurance policies. Relief to businesses and individuals who suffer losses as a result of the tariffs is expected to come from Ottawa, although the province says it will fill in any gaps in federal support.
Premier David Eby, who made an unusual appearance at the budget briefing Tuesday morning, announced two immediate retaliatory measures. The province emptied its government-owned liquor stores of products from so-called “red states” – states that are led by Republicans. As well, U.S. companies will no longer be allowed to bid on government contracts.
Bridgitte Anderson, president of the Greater Vancouver Board of Trade, acknowledged the budget was drafted in difficult circumstances. But she said she was concerned by the growth of debt and the failure to include measures that the business community had asked for, such as a plan to reduce government regulation.
“We did not see an agenda for economic growth,” she said. “The tariffs are a significant economic crisis for British Columbia, but this budget didn’t have the economic vision we were hoping for.”
Paul Finch, president of the B.C. General Employees Union, applauded the decision not to cut spending dramatically. But he said the government still hasn’t done what is needed: to re-evaluate taxation and capital spending in the face of a major upheaval.
“This budget had a lot of placeholders, and the placeholders are for the actual implementation of how we restructure our economy,” he said.
British Columbia’s economy started to slow in 2024, with exports declining and lower commodity prices for the province’s natural resources. Government spending outpaced growth, with a record deficit currently forecast to reach $9.1-billion in the fiscal year that ends this month.
The province’s taxpayer-supported debt is forecast to rise steeply. The interest bite – the share of revenue that is required to pay the interest on debt – will rise to 6.9 cents on the dollar over the span of the next three years, up from 4.3 cents on the dollar this year.
Ms. Bailey would not predict whether the province will face a credit downgrade, but she said B.C.’s debt-to-GDP ratio still compares favourably to Ontario.