The Canadian government is increasingly vexed with many prominent businesses in the Great White North that are refusing to spend their money. At last check, Canadian companies were sitting on a cash hoard worth approximately $626 billion. Instead of investing those available funds into their workers, development, or in the Canadian economy, critics say, businesses are instead using their capital to buffer themselves against economic volatility and line their executives’ pockets. As in the United States, where huge tech corporations, like Google and Apple, began reserving what has now reached $1.5 trillion with the economic crash of 2007, Canadian firms, by and large, are only looking to protect themselves. Instead, some say, they’re both hurting themselves and the Canadian economy overall.
What Cash Hoarding Signals to Others
Canadian lawmakers are looking for ways to attract businesses from the United States and around the world. According to a recent report from the CBC, Canada’s economy only grew by a paltry 1.2% in Q1 2014. By attracting foreign investors and businesses looking to expand into the country, the government hopes to speed up growth throughout 2014, and beyond.
Businesses from the States already have difficulties expanding northward, thanks in no small part to the completely different legal system they have to operate under when doing so. That coupled with a community of businesses that are clearly afraid to spend their money won’t help the country attract new business. As in the U.S., companies holding back on huge volumes of cash, cash that could be used to stimulate the national economy, are a sign to consumers, investors, and any businesses looking to expand that confidence in economic stability isn’t exactly through the roof. Hopes to stop that signal, more than anything else, are likely the drivers behind the government’s push for more corporate spending.
