Repeated lockdowns: From recession to depression
Montreal, December 16, 2020 – The Quebec government has just announced new stricter lockdown rules before the holidays. Yet repeated lockdowns, even if partial, are likely to inflict the effects of an economic depression on SMEs rather than those of a simple recession. An Economic Note prepared by Peter St. Onge in collaboration with Maria Lily Shaw launched today by the Montreal Economic Institute paints a worrisome picture.
“During the first COVID-19 lockdown, the unemployment rate in Canada reached 13.7%, a level not seen since the Great Depression. While the effects of the first lockdown were largely temporary, economic analysis tells us that repeated lockdowns erode the confidence of entrepreneurs and can have permanent consequences,” says Peter St. Onge, Senior Fellow at the MEI.
“The second wave of lockdowns is demoralizing for job creators. A Federation of Independent Business survey found that 56% of SMEs think they might not survive it,” adds the economist. “These are not just some abstract numbers. If a large number of commercial establishments disappear, the urban landscape will be erased.”
“It is difficult to evaluate the direct consequences of the lockdown measures put in place. But the economics is clear on this point: Each lockdown will be more destructive than the last for our economy and our small business owners,” concludes Maria Lily Shaw, Economist at the MEI.
The Economic Note entitled “Second Time’s the Harm: Repeated Lockdowns Risk Turning a Temporary Downturn into an Ongoing Depression” is available on our website.
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