Jock Finlayson, Executive Vice President and Chief Policy Officer of the Business Council of British Columbia (submitted)

Finlayson: B.C.’s economy devastated by pandemic – and the measures taken to contain it

‘Policy-makers should be acutely sensitive to the financial health of the overall business sector’

In its June 2020 Monetary Policy Report, the U.S. Federal Reserve – America’s central bank — observed that the COVID-19 pandemic “poses acute risks to the survival of many small businesses,” adding that widespread failures among such firms “would adversely alter the economic landscape of local communities and potentially slow the economic recovery and future labor productivity growth.”

The B.C. government would be wise to take this message to heart. Small businesses, as defined by the government’s statisticians, account for 98 per cent of all enterprises and approximately half of private sector jobs.

In the current challenging and uncertain economic climate, policy-makers should be acutely sensitive to the financial health of the overall business sector, including smaller firms.

Many of these companies are in sectors that have been hard-hit by pandemic-related social distancing, outright business closures, dwindling consumer demand, and reduced investment – for example, food services, accommodation, recreation, non-essential retail, travel, arts and entertainment, construction, and personal services.

Compounding the risks for small firms, they also tend to be more financially fragile than larger companies, with most having limited cash reserves and lines of credit.

Although B.C. has done a good job flattening the curve of COVID-19, the province’s economy has been devastated by the pandemic and the measures taken to contain it. For 2020, the Business Council forecasts that economic output (GDP) in the province will drop by almost 8 per cent, which is far greater than the GDP losses experienced in previous recessions.

As of mid-June, B.C. is down 350,000 jobs compared to early 2020 — a catastrophic fall in employment. While the worst of the COVID-19 economic downturn may be over, the consequences of steep declines in GDP, employment and business activity since February are expected to be felt for years to come. And much of the pain will be visited upon smaller and mid-sized enterprises in every sector and region of B.C.

The dramatic slide in consumer spending and business activity triggered by mandated closures across large segments of the economy, coupled with the virtual cessation of travel, border closures, and the onset of a global recession, has already led to casualties among B.C. firms.

Under the government’s staged economic reopening plan, many formerly shuttered businesses are – or soon will be — open again.

However, in sectors like retail, restaurants and bars, leisure, recreation, hotels and motels, and personal services, businesses are now required to maintain strict social distancing for customers and staff, to limit the number of people on-site, and to devote more resources to cleaning and sanitation.

This amounts to a significant change in the operating environment for many businesses, one that is likely to translate into both lower revenues and higher costs.

Looking ahead, a substantial number of businesses will not last through the end of 2021. We estimate that at least 10 per cent of the 200,000 B.C. businesses with paid employees could be gone in the next 6-18 months.

Some will make the difficult decision to cease operations, while others will be forced into insolvency because they are no longer able to cover their bills or service their debts.

The impact of a shrinking private sector will not be limited to business owners/operators. Fewer firms also mean lost jobs for B.C. workers, less vibrant communities, and greater economic hardship for families.

Faced with this alarming prospect, the provincial government must do what it can to minimize mortality among locally-based companies. Equally important, it should focus on creating an environment that supports business start-ups to help fill the gap that will open up as thousands of existing companies fail.

Despite a few positive steps, to date the NDP government has come up short in supporting the business community and in encouraging new business formation.

In fact, the government has largely carried on with its pre-pandemic policy agenda, which paved the way for increased tax and regulatory burdens for most businesses and higher payroll costs for employers.

A change of direction is necessary if policy-makers are interested in kick starting economic recovery and making British Columbia a top-ranked jurisdiction for new private sector investment and entrepreneurial activity.

Jock Finlayson is executive vice president and chief policy officer of the Business Council of British Columbia

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Langford boy wakes up from surgery to find stuffed puppy wearing the same cast

Hospital staff outfitted ‘Eddy’ the puppy to match the young patient

VIDEO: Annual artist studio tour goes virtual on Saanich Peninsula

ArtSea converts popular event to online format with personalized artist videos

Local Flavour: Youth take the lead in Victoria’s Pollinator Leadership Team

Guest writer Thompson Hygge, summer intern with Pollinator Partnership Canada

Sewage installation to delay drivers along Sooke Road until early September

Construction starts Monday, August 10 between 9 a.m. and 6 p.m.

Flyover at B.C. Leg to commemorate National Peacekeepers’ Day

August 9 marks biggest single day loss of Canadian lives from peace operations

QUIZ: Do you know the truth?

In what has been described as a post-truth era, how much do you know about truth and lies?

Simon Cowell breaks his back falling from electric bike

Incident happened at his home in California

Unofficial holidays: the weird and wonderful things people celebrate around the world

On any given day of the year, there are several strange, silly or serious holidays to observe

Missing teen visiting Courtenay found safe

She had last been seen going for a walk on Aug. 6

Moving on: Tanev scores 11 seconds into OT as Canucks oust Wild

Vancouver beats Minnesota 5-4 to move into first round of NHL playoffs

Fitness non-profit challenges citizens to invent a game to be physically active

The campaign was launched after a study showed only 4.8 per cent of children and youths in Canada met required standards of the 24-hour movement guidelines

Gene editing debate takes root with organic broccoli, new UBC research shows

Broccoli is one of the best-known vegetables with origins in this scientific haze

VIDEO: U.S. Air Force pilot does fly-by for B.C. son amid COVID border separation

Sky-high father-son visit plays out over White Rock Pier

3 Vancouver police officers test positive for COVID after responding to large party

Union president says other officers are self-isolating due to possible exposure

Most Read