OTTAWA (NEWS 1130) – Prime Minister Justin Trudeau has announced an increase in the wage subsidy for small and medium size businesses that have been impacted by COVID-19.
Qualifying businesses will see the wage subsidy increase from 10 per cent to 75 per cent, and it will be backdated to March 15.
“This means that people will continue to be paid even though their employer has had to slow down or stop its operations because of COVID-19,” Trudeau said on Friday. “We’re helping companies keep people on the payroll so that workers are supported and the economy is positioned to recover from this.”
#BREAKING Prime Minister Justin Trudeau says government will subsidize wages of workers at qualifying small & medium businesses by 75%. This is up significantly from the intial 10 percent govt previously announced.
— Martin MacMahon (@martinmacmahon) March 27, 2020
The subsidy increase is part of a suite of small business measures being rolled out. Additionally, the prime minister said banks will offer $40,000 loans to storefront shops, which are interest free for a year, and up to $10,000 could be waived for repayment.
“We know that this is going to be a significant measure” to invest in Canadian businesses, Trudeau told reporters, adding he hopes anyone who’s been forced to lay off workers will consider hiring them back with the help of the wage subsidy increase.
Prime Minister also says there will be new loans for storefront businesses. There will be a new emergency account that will see banks offer $40,000 loans, which will be interest free for the first year #cdnpoli
— Cormac Mac Sweeney (@cmaconthehill) March 27, 2020
The announcement came as the Bank of Canada slashed its interest rates yet again, down to a 0.25 per cent. The central bank’s Governor Stephen Poloz said earlier Friday this is the lowest he would lower the lending rate, so it likely will not dip as low as it has in the U.S., where it’s at zero.
Poloz said the hope is to immediately support the financial system and lay the foundation for the economy to bounce back.
Meanwhile, a grim report from the Parliamentary Budget Officer was also released Friday. The economic and fiscal estimates predicts the economy will contract by 5.1 per cent this calendar year, the weakest on record since 1962, because of the COVID-19 crisis. It also projects the unemployment rate could rise to 15 per cent in the third quarter.