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

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

Send your letter to the editor via email to news@summerlandreview.com. Please included your first and last name, address, and phone number.
LETTER: Summerland affordable housing proposal opposed

“For a building that will change the dynamic of a small town, I would have expected more discussion.”

Baldy Mountain Resort is temporarily closed following the death of a resort family member. Pictured above is a sunrise at the resort, Feb. 19, 2021. (Baldy Mountain Resort/Facebook)
Baldy Mountain ski hill closed following death of resort family member

Authorities currently investigating, resort set to reopen Sunday, Feb. 27

Butter and sourdough bread is shown at a house in Vernon, B.C. on Wednesday, February 24, 2021. A Quebec dairy farmers’ group is calling on milk producers to stop feeding palm oil or its derivatives to livestock as controversy churns over how these supplements affect the consistency of butter. (THE CANADIAN PRESS - Jesse Johnston)
Poll: Care to spread your feelings on butter?

Reports of hard butter have rattled the Canadian dairy industry

A dose of COVID-19 vaccine is prepared at a vaccination clinic in Montreal’s Olympic Stadium on Tuesday, Feb. 23, 2021. THE CANADIAN PRESS/Paul Chiasson
39 new cases of COVID-19 in Interior Health region

The total number of cases in the region since the pandemic began is now at 7,334

Summerland’s municipal council will proceed with a four per cent property tax increase this year, but the deadlines for property tax payment have been extended. (John Arendt - Summerland Review)
Summerland councillor’s letter to media draws disappointment from colleagues

Statements about solar project did not violate ethical or conduct standards

Abbotsford’s Kris Collins turned to TikTok out of boredom when the provincial COVID-19 lockdown began in March 2020. She now has over 23 million followers on the video app. Photo: Submitted
Internet famous: Abbotsford’s Kris Collins is a TikTok comedy queen

Collins has found surprise stardom alone with a phone

Approximate location of the vehicle incident. (Google Maps)
Vehicle incident blocking Coquihalla traffic in both directions

Both directions of traffic stopped due to vehicle incident

(HelloKelowna - Twitter)
West Kelowna billboard bearing anti-vaccine messaging deemed misleading

Ad Standards investigated the billboard, noting a lack of evidence to support the messaging

RCMP. (Phil McLachlan/Capital News)
Chase RCMP arrest intoxicated man running into highway traffic

The man was wanted on several warrents in Alberta; was held overnight but released

Nanaimo children’s author and illustrator Lindsay Ford’s latest book is ‘Science Girl.’ (Photo courtesy Lindsay Ford)
B.C. children’s writer encourages girls to pursue the sciences in new book

Lindsay Ford is holding a virtual launch for latest book, ‘Science Girl’

Pig races at the 145th annual Chilliwack Fair on Aug. 12, 2017. Monday, March 1, 2021 is Pig Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of Feb. 28 to March 6

Pig Day, Canadian Bacon Day and Grammar Day are all coming up this week

Staff from the Marine Mammal Rescue Centre, passersby, RCMP and Nanaimo Fire Rescue carried a sick 300-kilogram steller sea lion up the steep bluff at Invermere Beach in north Nanaimo in an attempt to save the animal’s life Thursday. (Photo courtesy Marine Mammal Rescue Centre)
300-kilogram sea lion muscled up from B.C. beach in rescue attempt

Animal dies despite efforts of Nanaimo marine mammal rescue team, emergency personnel and bystanders

Doctors and counsellors warn of an increase in panic attacks, anxiety, depression and suicide ideas between ages 10 to 14, in Campbell River. ( Black Press file photo)
Extended pandemic feeding the anxieties of B.C.’s youth

Parents not sure what to do, urged to reach out for help

Kara Sorensen, diagnosed with lung cancer in July, says it’s important for people to view her as healthy and vibrant, rather than sick. (Photo courtesy of Karen Sorensen)
B.C. woman must seek treatment overseas for inoperable lung cancer

Fundraising page launched on Karen Sorensen’s behalf, with a goal of $250,000

Most Read