Canada records six straight quarters of negative business creation
Updated
Updated · The Hub · Apr 29
Canada records six straight quarters of negative business creation
7 articles · Updated · The Hub · Apr 29
An MEI report says self-employed Canadians with paid staff fell to 716,000 in 2025 from 867,000 in 2005, a net loss of 151,000 despite population growth.
Quebec dropped from about 194,000 to 122,000 such entrepreneurs, while business creation in 2023 was 12.3% of active firms, about half early-1980s levels.
The report blames high taxes, regulations favouring incumbents and state programs crowding out private capital, while business groups say labour shortages and weak policy support are worsening Canada's entrepreneurial drought.
Canada's economy is booming, so why are its entrepreneurs vanishing?
With investment favoring housing over startups, where will Canada's future innovation come from?
Can drastic tax cuts and deregulation truly reverse two decades of entrepreneurial decline?
Canada’s Entrepreneurial Drought: Over 7,000 Businesses Lost in Q2 2025 Amid Tax, Regulatory, and Labor Crises
Overview
From early 2024 to the end of 2025, Canada faced six consecutive quarters of net business decline, driven by a high business exit rate and falling new business entries. This crisis was fueled by heavy burdens from high taxes, complex regulations, and critical labor shortages, including the looming expiration of over 1.3 million temporary foreign worker permits. The regulatory environment alone cost small businesses over $51 billion in 2024 and wasted millions of hours annually. These challenges eroded entrepreneurial confidence, with over half of small business owners advising against starting new ventures. The decline in business dynamism is weakening Canada's competitiveness and causing entrepreneurial talent to leave, highlighting an urgent need for comprehensive tax, regulatory, and labor reforms.