Canada continues to lose businesses at an alarming rare, according to a new report from the Canadian Federation of Independent Business (CFIB).
In fact, the Canadian economy is losing businesses faster than it can replace them with new ones, says the advocacy group.
The CFIB report refers to an “entrepreneurial drought,” which it defines as a year or more in which “business entry rates are strictly lower than business exit rates.”
It says the drought has been ongoing since 2024, making it the worst period for entrepreneurs outside of the Covid-19 pandemic in 2020-21.
More than half of small business owners are discouraging entrepreneurship because of financial risks, regulatory hurdles, trade concerns, and long-term uncertainty, according to the report.
The Organisation for Economic Co-operation and Development (OECD) says Canada’s productivity growth has averaged 0.86% since the year 2000, which lags the U.S. rate of 1.4%.
It also projects Canada will have the lowest real GDP growth among its members through 2060, averaging only 0.78% a year, which is less than half the expected U.S. rate.
The CFIB is calling on federal and provincial governments to take action to address the rising cost of doing business by cutting takes, improving labour mobility, and reducing regulations.
As an example of issues that need to be addressed, the CFIB notes that several Canadian provinces hinder business growth by applying provincial sales tax to capital investments.
Making changes such as ending taxes on capital investments could go a long way to helping small businesses across the country, says the CFIB in its report.
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