CFIB Warns of Further Business Closures Across Canada in Wake of Additional COVID-19 Shutdowns
As some regions in Canada move to impose stricter COVID-19 conditions and lockdowns, an increasing number of businesses may not be able to withstand the financial pressure, and risk shutting their doors permanently.
According to the Canadian Federation of Independent Business (CFIB) CEO Dan Kelly, approximately 225,000 businesses across Canada risk permanent closure as a result of pandemic shutdowns. Kelly notes that nearly half of Canadian businesses have seen their sales drop amid the second wave – even those that have not been affected by additional rounds of restrictions.
Despite being eight months into the pandemic, many government support systems aimed at Canadian businesses have yet to be smoothed out or even put into place. The government has yet to follow through on its promised Canada Emergency Business Account (CEBA) expansion, as well as provide further funding for wage subsidies. As a result, Kelly is urging governments to minimize the impact of shutdowns by concentrating them only on specific problem areas, and then lifting them as soon as safely possible.
CFIB’s comments follow announcements from several provinces regarding further economic closures. Manitoba has now moved into the critical level of its pandemic response system, which mandates that all non-essential businesses including personal services, retail stores, religious gatherings, and gyms close, while social gatherings are limited to immediate family members only. Likewise, the City of Toronto has extended its ban on indoor dining for another month, which will likely put further strain on at-risk businesses such as restaurants.
However, it also appears that the pandemic may have caused a shift in consumer behaviour, which could further threaten the viability of many businesses across Canada. According to a recent survey conducted by the Agri-Food Analytics Lab at Dalhousie University, an increasing number of Canadians have shifted to e-commerce in leu of brick-and-mortar shopping for their food needs, and and as a result, the restaurants and grocery stores that are currently struggling amid pandemic shutdowns will likely face further obstacles even after the pandemic.
Information for this briefing was found via Bloomberg and the Agri-Food Analytics Lab. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
