MOJO MISSING: Private sector activity in B.C. broadly weak, says new economic report
Vancouver, Dec. 04, 2025 (GLOBE NEWSWIRE) -- The Business Council of British Columbia (BCBC) has released a new economic report, Searching for the Private Sector’s Lost Mojo, providing a snapshot of current conditions and an outlook for the B.C. and Canadian economies. The findings suggest a sobering outlook as the economies’ home-grown challenges are now exacerbated by a weaker global growth backdrop.
According to the report, B.C. is stuck on a path of subdued growth, marked by booming but unsustainable growth in public sector activity contrasted with broad-based sluggishness in private sector activity. Provincial GDP growth is expected to remain below 2 per cent in both 2026 and 2027, compared with a long-term average of about 2.5 per cent. While it may sound small, half a percent can mean the difference between billions of dollars in lost economic activity over just a few years — money that would otherwise support jobs, family incomes, and public services.
Part of the slowdown in B.C. stems from the completion of four once-in-a-generation “mega” construction projects worth roughly $100 billion in total, without much other private sector activity in the near term to take their place. Meanwhile, public-sector spending is booming at 2.5 per cent of GDP, while B.C. is running the largest operating deficit in Canada as a share of its economy.
At the national level, Canada’s economy is also facing deep challenges that started well before President Trump’s inauguration on January 20th. Adjusted for population, Canada’s economy has barely grown in a decade. From 2014 to 2024, in total, Canada’s output per person rose by less than two per cent, compared with about 20 per cent in the United States and 15 per cent across OECD countries on average.
According to David Williams, Vice President of Policy and author of the report, “The federal government’s economic growth strategy over the past decade largely centred on promoting three booms: government spending, mortgage borrowing, and population growth. Demonstrably, all three failed to achieve rising output per person. Arguably, they may have actually depressed private-sector activity by diverting capital and workers away from more productive uses.”
The report further notes that there is a wide disparity between economic conditions in the public and private sectors, which is evident in both GDP and employment data. Describing the imbalance as a Dickensian “tale of two cities,” Williams notes that on one side stands a fast-growing public sector; on the other, private industries that are growing slowly or even shrinking — an unsustainable pattern since the private sector provides the tax base to fund the public sector.
Key findings:
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- Below average growth expected: B.C.’s GDP is forecast to grow by less than 2% in both 2026 and 2027, below the long-run average of about 2.5% per year.
- Public sector hiring booming, private sector hiring lagging: Since 2019, public-sector employment in B.C. has exploded by about 39%, while private-sector employment is up by only around 6% in almost seven years.
- Record out-migration: Sluggish private sector activity has translated into record out-migration. The number of residents leaving B.C. for other provinces (especially Alberta) recently jumped to around 60,000 to 70,000, levels unseen since the mid-1970s and late-1990s. This is concerning as interprovincial migrants leaving B.C. tend to be young (aged 15-39 years), skilled, and net contributors to the tax base.
- Investment lull and property rights uncertainty: Outside publicly funded projects, business investment is in a lull. While proposed large-scale projects may eventually provide a lift to GDP, they would not begin construction until near the end of the decade. At the same time, the landmark Cowichan Tribes V. Canada decision introduces uncertainty about the legal status of private property in B.C.
“The federal and provincial governments are betting on selected large-scale resource projects to kickstart economic growth and are committing to “fast track” them through cumbersome government permitting processes,” says Williams. “However, most await final investment decision, and construction would still be some years away.”
Williams notes that, in the interim, policymakers in Ottawa and Victoria should continue to rethink the tax and regulatory settings facing the broad private sector. The recent Canada Mutual Recognition Agreement, which aims to reduce regulatory impediments to cross-Canada trade in goods, is a step in the right direction.
Read the full report here.
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Braden McMillan Business Council of British Columbia braden.mcmillan@bcbc.com
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