Uncertainty around the U.S has helped cause a significant downturn in Canadian optimism, according to a survey of professional accountants in leadership positions by the Chartered Professional Accountants of Canada (CPA Canada).
In its Q1 2018 CPA Canada Business Monitor, the body found growing sentiments of U.S trade protectionism (30%) and U.S tax reforms (7%) were two of the top three challenges to the Canadian economy.
The other primary cause for concern was uncertainty around the Canadian economy, which 16% of the 408 respondents to the survey highlighted as a challenge.
Overall, over two-thirds (67%) of respondents reported that Canada is now a less competitive place to invest and do business in versus the U.S compared to just one year ago.
This affected the optimism towards the Canadian economy, which saw a dip of 14 percentage points between Q4 of 2017 (48%) and Q1 of 2018 (34%). This fall brought confidence levels to its lowest point since 2016.
CPA Canada president and CEO Joy Thomas commented: "Uncertainty is dominating, especially with growing protectionist trade sentiments and tax changes in the U.S. Canadian business leaders are looking for assurance from the federal government that the situation is being properly monitored to allow a course of action to be developed that will keep Canada competitive."
A majority of Canadian business leaders (84%) agreed a detailed analysis of U.S. tax reforms to assess the potential impact on Canada is urgently needed and 93% said the results should be made public shortly after the analysis is completed.
Additionally, more than eight in ten (82%) reported being disappointed the government did not set a date for a return to balanced budget.
Company Specific Findings
The top three factors impacting business planning over the course of the next year were reported to be uncertainty surrounding the Canadian economy (32%), employee retention, acquisition and development (30%) and lack of skilled workers (24%).
Other findings included:
• Company optimism continues to hover around the 60% mark.
• Over two thirds (69%) of respondents have projected revenue growth for their companies over the next 12 months and 63% anticipated an increase in profits, both similar to last quarter.
• With respect to employee numbers, 44% predicted growth at their company. Over a third (38%) anticipated no change in employee numbers while 18% expected a drop.