An expected winter recession will “hurt small businesses significantly,” a former federal Budget Officer yesterday told the Senate banking committee. Both the Bank of Canada and Department of Finance forecast a recession is likely, according to Blacklock's Reporter..“It’s going to hurt small businesses significantly because with higher interest rates, people are not going to want to use credit,” said Kevin Page. “We have to be careful.".The Bank of Canada next Wednesday is expected to raise interest rates for the seventh time this year. “There are these darker clouds that we’re talking about,” said Page..“The slowdown that is effectively being planned by the central bank to take some demand pressure out of the economy is going to hurt small business for sure,” said Page. “That is where it will hurt, and all the people who work for them.”.“You can’t raise interest rates three-and-a-half percentage points this year, very dramatically, really a monetary policy shock, perhaps even another increase next year, and say it’s not going to have an impact,” said Page. “It is going to change financial conditions dramatically. It’s been very fast.”.Small businesses carry a payroll of 8.2 million people, the equivalent of 68% of the private sector workforce. The Department of Industry in a Tuesday report Key Small Business Statistics said of 1,187,658 small operators nationwide more than half, a total 671,347, have fewer than five employees. “The slowdown is likely inevitable,” Page told the Senate committee..“With the growth slowdown and the change in financial conditions, small business is going to get hurt,” said Page. “That is the price we have to pay.”.Bank of Canada Governor Tiff Macklem testified November 1 at the banking committee that a recession was likely but hopefully would not last long. “It’s not a severe recession,” said Macklem..David Dodge, former governor of the central bank, testified September 23 that a recession was all but unavoidable, and employment was going to rise..“Zero growth rates after a period of 3% growth at annual rates that we’ve recently had is not going to feel so good,” said Dodge. “Yes, that’s going to happen.”.Finance Minister Chrystia Freeland in a November 3 Fall Economic Statement confirmed a recession was likely. “Times feel tough,” Freeland told the House of Commons. “Our economy is slowing down.”.“We cannot support every single Canadian in the way we did with emergency measures at the height of the pandemic,” said Freeland. “To do so would force the Bank of Canada to raise interest rates even higher. It would make life more expensive for everyone for longer.”
