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Business investment has been the missing piece in the economic growth jigsaw for most of the major G7 nations since the recession hit in 2008. Canada had been the one exception, thanks to our once-booming oil industry, giving us the fastest post-2009 recovery in the G7. After oil prices collapsed, Canada joined the crowded ranks of countries with weak investment.

It is difficult to see a sustained upturn in growth without a boost from business investment, and that does not appear to be in the offing. The legendary economist Gary Becker blamed persistently slow investment growth in the U.S. after 2008 on the raft of new regulations brought in by the Obama administration on everything from housing to banking to energy and the environment. Regulation also has hampered investment in Canada. In the west, approval for pipelines and gas terminals keep getting delayed, while the explosion of regulations in Ontario over the past decade, on top of its soaring cost of energy, has been accompanied by businesses’ reluctance to invest and commit to growth.

We have reached the limits of the stimulus possible from monetary and fiscal policy

Slower business investment has insidious effects on the economy. Not only does it weaken growth in the short term, but it inhibits the growth of productivity needed to boost our long-term potential. In turn, persistently weak investment and productivity growth has implications for the conduct of macroeconomic policy. In its annual report, the Bank for International Settlements (which operates as the central bank for monetary authorities around the world) highlighted how governments have reached the limits of the stimulus possible from monetary and fiscal policy when productivity is stagnant.