Business Confidence Reaches Historic Lows; Recovery Needs to Focus on Hardest HitJanuary 28, 2021
(Toronto – January 28, 2021) – Today, the Ontario Chamber of Commerce (OCC) released the fifth annual Ontario Economic Report (OER), providing the latest data on Ontario’s economy and business confidence, highlighting the unprecedented year that was 2020 and the unpredictability that lies in the year ahead. Public policy makers looking at strategies to support Ontario’s long-term economic recovery will benefit from the findings outlined in the OCC’s flagship annual report.
“The current health and economic crises have had a considerable negative impact on our economy. Only 21 percent of businesses are confident in Ontario’s economic outlook—a historic low—reflecting the stark reality in which businesses continue to grapple with the financial and logistical challenges of operating under a pandemic,” says Rocco Rossi, President and CEO of the Ontario Chamber of Commerce.
The 2021 OER uncovers the disproportionate impact of COVID-19 on small businesses and entrepreneurs as well as specific regions, sectors, and demographics, highlighting the major vulnerabilities and opportunities Ontario will face in the year ahead.
“Small businesses are the backbone of our economy and are least confident in the province’s economy, as they continue to face unprecedented liquidity constraints, increased costs, and reduced revenues. Many businesses have already had to shut their doors indefinitely,” added Rossi.
This year’s OER also reveals the hardest-hit sectors were those requiring considerable face-to-face contact, namely: accommodation and food services; arts, entertainment, and recreation; and retail. Findings indicate that employment growth declined throughout the province with women, lower-income, racialized, new immigrant, and younger Ontarians suffering the biggest job losses. Every region of the province felt the impacts of the recession, though some considerably more than others.
The report’s co-author, Daniel Safayeni, Acting Vice President of Policy at the OCC, added: “No business, region, sector, or demographic should be left behind in the pursuit of economic recovery and growth. Support programs and pro-growth policies should be targeted towards those experiencing the most pronounced challenges. A focus on reskilling as well as widespread access to broadband infrastructure and capital will be necessary to the revival of small business and entrepreneurship as well as an inclusive and robust economic recovery.”
Key highlights from the OER include:
- Ontario witnessed a steep decline in real GDP growth (-5.6 percent) in 2020 but is projected to see a moderate rebound of 4.8 percent in 2021, fuelled largely in part by expectations for vaccination rollout and the eventual re-opening of the economy.
- In 2020, only 21 percent of survey respondents expressed confidence in Ontario’s economic outlook. Less than half of Ontario businesses (48 percent) are confident in the outlook of their own organizations over the next year.
- Small businesses are more pessimistic about Ontario’s outlook than larger ones. Only 20 percent of small businesses expressed confidence in Ontario’s economy, compared to 27 percent of medium and large businesses.
- The majority (58 percent) of survey respondents said their organizations shrank between April and September, while only 17 percent grew.
- Employment growth declined throughout the province in 2020, with 47 percent of organizations indicating they let employees go due to COVID-19.
- Sectors most negatively impacted by the crisis included: accommodation and food services; arts, entertainment, and recreation; and retail. Businesses in these sectors were among those most pessimistic about the economic outlook and most likely to have shrunk and let go of staff in 2020.
- Businesses’ priorities for governments during economic recovery included enhancing access to capital, reforming business taxes, encouraging Ontarians to buy local, and investing in broadband infrastructure.
“The prolonged nature of the crisis, rising case counts, and uncertainty around vaccine deployment timelines have taken a toll on employers and Ontarians across the province. Yet, Ontario has a proven track-record of resilience and recovery. Our long-term prosperity will depend on all levels of government, business, chambers of commerce and boards of trade working together towards economic recovery,” added Rossi.
“The OCC’s Ontario Economic Report provides valuable insight into the challenges Ontario businesses have faced during the pandemic. As a key partner in supporting economic recovery, Hydro One will continue to advocate for customers and businesses while collaborating with industry, government and municipalities to spark economic growth,” said Mark Poweska, President and CEO of Hydro One. “Through our Ontario-focused strategy, we will continue to energize life and strengthen local economies by investing in a resilient, safe and reliable electricity system.”
The Ontario Economic Report was made possible by support from Hydro One.
“COVID-19 has had a devastating impact on many businesses of all sizes. The health and safety of all Ontarians remains our top priority because we know we can’t have a healthy economy without a healthy workforce. To support businesses during this difficult period, our government is providing significant financial support, including through the Ontario Small Business Support Grant. This program provides a minimum of $10,000 and up to $20,000 to help offset a variety of costs, including personal protective equipment, rent, wages, hydro, and property taxes. We are also laying the groundwork for our long-term recovery with critical investments in broadband, transit, and highways. We will always have the backs of our business owners. I am confident that, with the help of great partners like the Ontario Chamber of Commerce and its members, our economy will come back with a vengeance when this crisis is over. Because tough times don’t last, but tough people do.” – Premier of Ontario, Leader, Ontario Progressive Conservative Party
“People and local businesses have done their part during the pandemic with the support and resources of chambers of commerce and boards of trade. They kept as many people on the payroll as they could, kept supply chains moving, and worked hard to stop the spread. I believe they deserve a government that does its part, too, by investing in the survival of Ontario businesses and jobs today, and laying the groundwork for a post-pandemic comeback that unlocks Ontario’s potential.” – Andrea Horwath, Leader, Ontario New Democratic Party
“Through unprecedented challenges, Ontario’s business community continues to show its strength and resiliency, thanks to an amazing workforce and strong advocates like the Ontario Chamber of Commerce. As the son of a former small business owner, I understand how difficult these times are, and I will continue to fight for more support so that businesses can survive and thrive through the recovery from COVID-19.” – Steven Del Duca, Leader, Ontario Liberal Party
“The past year has been hard on Ontario businesses, especially small businesses. Thank you to the Ontario Chamber for the work they do in support of business of all sizes across the province. I’ve been advocating for direct financial support for businesses so they have a fighting chance to survive the pandemic. As we begin to think about recovery, we have to ensure that we leverage the opportunities that a greener and more caring economy can offer. We must learn from the lessons of the pandemic and work to ensure our businesses can recover and thrive once more.” – Mike Schreiner, Leader, Ontario Green Party
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About the Ontario Chamber of Commerce
For more than a century, the Ontario Chamber of Commerce (OCC) has been the independent, non-partisan, indispensable partner of Ontario business. The OCC’s mission is to support economic growth in Ontario by defending business priorities at Queen’s Park on behalf of its network’s diverse 60,000 members.
About the Ontario Economic Report
The Ontario Economic Report (OER) is the landmark research platform of the Ontario Chamber of Commerce (OCC), offering a unique perspective on the experience of businesses of all sizes across the province. The OER is a data-driven, evidence-based document rooted in the OCC’s annual survey of its members, the Business Confidence Survey (BCS).
For more information or to arrange an interview:
Ceara Copps – Edwards
Manager, Public Affairs
Ontario Chamber of Commerce
firstname.lastname@example.org| Mobile: (647) 936-6734