Why Your Lobbyist Is the Most Powerful Asset in a Recession: Navigating Recovery and Opportunity with Expert Advocacy
What instruments are available for Governments to Combat Recession? What Tactics can Government Relations specialists deploy to Assist Your Organization?
TD’s Latest Announcement on Recession
TD Economics announced today that Canada is entering a recession, with expectations that the country will soon lose another 100,000 jobs. This statement was made by TD’s Chief Economist, reflecting growing
Concerns about the Canadian economic outlook amid persistent inflation, rising tariffs, and global uncertainty.
Key Details from TD’s Announcement
Recession Confirmed: TD now anticipates a recession for Canada, with two consecutive quarters of negative economic growth projected. The downturn is expected to be “shallow,” meaning thecontraction will be modest but still meet the technical definition of a recession.
Job Losses: The announcement specifically warns that Canada could lose another 100,000 jobs as the recession unfolds, highlighting the potential impact on employment.
Drivers of the Recession:
Tariffs: Recent escalations in tariffs, particularly from the U.S., are cited as a major factor pushing the Canadian economy into recession. TD’s scenario analysis suggests that if broad tariffs remain in
place for six months or longer, the negative effects on growth and confidence will be significant.
Inflation: Inflation has come in hotter than expected, and even after accounting for tax changes, underlying inflation pressures are persisting. This complicates the policy response and weighs on
consumer and business confidence.
Business and Consumer Confidence: The combination of higher costs, trade uncertainty, and policy headwinds is causing both consumers and businesses to pull back on spending and investment.
Tactics Options Used by Government
1. Fiscal Policy Tools
Fiscal policy is the primary government tool to stimulate an economy during a recession. It includes:
Increased Government Spending: Governments can boost economic activity by funding public projects such as infrastructure, schools, and hospitals. This creates jobs directly and increases demand for materials and services, which in turn stimulates consumer spending and business confidence.
Tax Cuts and Incentives: Reducing taxes puts more disposable income into the hands of consumers and businesses, encouraging spending and investment. This helps increase demand for goods and services, leading businesses to hire more workers and potentially raise wages, creating a virtuous cycle of economic growth.
Stimulus Packages: Governments can enact stimulus packages that combine spending increases and tax reductions to directly counteract economic contraction. These packages aim to raise GDP components such as consumer spending and government expenditure to lift the economy out of recession.
Automatic Stabilizers: These are built-in fiscal mechanisms like progressive taxation and unemployment benefits that automatically increase government spending or reduce tax burdens during downturns without new legislation, providing timely economic support.
2. Monetary Policy Coordination
While fiscal policy is government-led, monetary policy is typically managed by central banks. However, coordinated efforts are essential:
Interest Rate Adjustments: Central banks can lower interest rates to make borrowing cheaper, encouraging spending and investment. Conversely, raising rates can cool inflation but may slow growth.
Open Market Operations: Buying government securities to increase money supply and encourage lending and investment or selling securities to tighten the money supply.
Though monetary policy is distinct from government fiscal policy, effective recession management often requires coordination between the two to maximize impact.
3. Regulatory and Policy Interventions
Governments can also intervene through regulatory measures to stabilize markets and provide flexibility during crises. For example, easing certain regulations temporarily can help businesses maintain operations during economic stress.
Importance and Unique Opportunity of Government Relations
Government relations (GR) refers to the strategic interaction between organizations and government bodies to influence public policy and secure support. In the current and post-recession environment, GR becomes a vital and unique opportunity for several reasons:
Access to Resources and Support: Organizations with strong government relations can more readily access government grants, loans, stimulus funds, and emergency resources designed to mitigate recession impacts.
Regulatory Flexibility: Effective GR can help businesses negotiate temporary regulatory adjustments that enable continued operations and quicker recovery during economic downturns.
Enhanced Communication and Influence: Maintaining open channels with government officials allows organizations to stay informed about policy changes, participate in shaping economic recovery measures, and advocate for industry-specific needs.
Navigating Political and Economic Uncertainty: As governments deploy various fiscal and policy tools, organizations engaged in government relations can better anticipate shifts in policy and adapt strategies accordingly.
Building Long-Term Resilience: Establishing and nurturing government relations creates a foundation of trust and influence that can be leveraged not only during recessions but also in future crises or regulatory changes.
Supporting Economic Recovery: Government relations teams and lobbyists can advocate for policies that promote economic recovery, such as infrastructure spending or tax incentives, benefiting both the broader economy and specific sectors.
Conclusion
In light of TD Bank’s forecast of a modest recession with significant job losses in Canada, Carney and Doug Ford will likely rely heavily on fiscal policy tools—such as increased public spending and tax cuts—to stimulate growth and employment.
Monetary policy coordination and regulatory interventions will complement these efforts.
In times of economic uncertainty, expert government relations and project coordination are your keys to unlocking critical funding and navigating complex policy changes. TheCCSGroup and CCSProject connect you directly to decision-makers and streamline your path to success—positioning your organization to thrive, even in a recession.
E-mail us at ron@theccsgroup.ca to discover how we can champion your interests and accelerate your projects during these uncertain times.