Canada creates businesses barely faster than it loses them. For every business that exited in 2021, 1.13 entered — down from 1.48 in 1984. In 2023 the entry rate fell to 12.3% while the exit rate rose to 11.9%, a percentage point above the record low set the year before. Canada still runs ahead of the United States on this measure, which matters more than it sounds: the United States is the only G7 country whose business-exit data can be put on the same axis as ours.
Business formation is the entry point to every other metric in this pillar. A country that is not starting firms has nothing to take public, nothing to patent, and nothing to scale. Canada measures this unusually well — Statistics Canada runs three separate programmes on business death alone, one of them monthly — and the picture they return is not the one the monthly headlines suggest.
Statistics Canada's own long-run work puts Canada and the United States on one chart, which settles the comparability question for the only peer where it can be settled. The measure is the ratio of the entry rate to the exit rate: above 1.00, more businesses are being created than lost; below 1.00, the business population is shrinking.
Canada entered the 1980s creating roughly three businesses for every two that closed. It now creates about nine for every eight. The decline is not a Canadian peculiarity. The American series falls by exactly as much over the same span — 0.35 on the ratio, from 1.37 to 1.02, against Canada's 1.48 to 1.13 — so Canada has kept its lead without arresting its own slide. The pandemic year is visible and exceptional in both series, and in opposite directions: Canada's ratio collapsed to 0.82 in 2020, the lowest value in the published record, while the American ratio held at 1.02.
The levels behind the ratio move the same way. Earlier research quoted in the same article, covering 1983 to 2012, found Canada's entry rate fell from 24.5% to 13.1% while the exit rate fell from 16.5% to 11.6% — entry down by close to half, exit down by under a third. Statistics Canada's latest annual figures show the gap closing again from the other side: entry at 12.3% in 2023, down from 13.9%, and exit at 11.9%, up from 10.8%.
Almost every public discussion of business failure in Canada runs on insolvency filings, because the Office of the Superintendent of Bankruptcy has published them monthly since 1987 and they arrive within about six weeks. They are also the smallest possible slice of the phenomenon. Statistics Canada linked its business microdata to the insolvency register and found that over 2004 to 2020, an average of 0.22% of incorporated employer businesses filed for bankruptcy each year and 0.04% filed a proposal to creditors, against 9.0% that exited. Nearly all bankruptcies end in exit; almost no exits involve a bankruptcy.
The practical consequence is that a rise or fall in insolvency filings is close to useless as a read on business failure, and that the only measures worth benchmarking are the ones that count businesses ceasing to have employees, whether or not a court was ever involved.
There is no harmonised business-closure indicator for the G7. Two incompatible definitions split the group. Canada and the United States count a business as closed when it stops having payroll employment, with no waiting period. The United Kingdom, France, Germany, and Italy count an enterprise as dead when it is de-registered from the business register, and only if it has not been reactivated within two years. The two bases differ in level, in timing, and in what they are actually measuring; putting them on one axis would produce a ranking that means nothing.
The register-basis group can be ranked against each other, and the spread within it is wide: France at 10.93% and the United Kingdom at 10.8% against Italy at 5.71%, all for 2023 and all provisional, with the European Union average at 8.51%. Canada, the United States, and Japan publish nothing on this basis at all.
Japan is the binding constraint on any G7 ranking of business exit. Its only official figure is an exit rate of 3.9% for fiscal 2023, derived from employment-insurance records rather than from a business register or a payroll-transition rule — a third basis again, and not comparable with either group. The timelier Japanese numbers, from Teikoku Databank and Tokyo Shoko Research, are commercial products rather than official statistics.
| Country | What is published | Basis | Frequency | Latest |
|---|---|---|---|---|
| 🇨🇦 Canada | Monthly openings and closures; annual exits | Payroll employment | Monthly and annual | Closures 4.8% (Dec 2025); exits 11.9% (2023) |
| 🇺🇸 United States | Establishment closings, and establishment deaths | Payroll employment | Quarterly | Closings 5.2%; deaths 3.0% (Q1 2025) |
| 🇬🇧 United Kingdom | Enterprise deaths; a quarterly closure count in development | Business register | Annual and quarterly | 9.8% (2024, provisional) |
| 🇯🇵 Japan | Exit rate from employment-insurance records | Insured establishments | Annual, fiscal year | 3.9% (FY2023) |
| 🇫🇷 France | Enterprise deaths | Business register | Annual | 10.93% (2023, provisional) |
| 🇩🇪 Germany | Enterprise deaths | Business register | Annual | 8.87% (2023, provisional) |
| 🇮🇹 Italy | Enterprise deaths | Business register | Annual | 5.71% (2023, estimated) |
Canada’s two entries are not interchangeable: a monthly closure rate and an annual exit rate measure different events over different windows. Sources and definitions for every row are in the companion workbook.
Canada is the only G7 country publishing a monthly business closure figure. Table 33-10-0270-01 has run since January 2015, arrives about three months in arrears, and is built from Canada Revenue Agency payroll-deduction remittances. Statistics Canada still labels it experimental.
It is also routinely read as a count of businesses lost, which it is not. A closure in this series means a business had employees last month and none this month; it may be seasonal, temporary, or a restructuring. Statistics Canada is explicit that “a business can close and reopen within a year, [while] a business can only exit or enter once.” The releases prove the point by decomposing the opening rate: in December 2025, reopenings ran at 3.2% against new entries at 1.6% — two-thirds of that month’s openings were businesses coming back rather than businesses starting.
| Reference month | Opening rate | Closure rate | of which new entries | of which reopenings |
|---|---|---|---|---|
| July 2025 | 5.0% | 5.0% | not published | not published |
| August 2025 | 4.7% | 4.8% | not published | 3.3% |
| October 2025 | 4.5% | 4.9% | 1.7% | 2.9% |
| December 2025 | 4.8% | 4.8% | 1.6% | 3.2% |
Source: Statistics Canada table 33-10-0270-01, seasonally adjusted, as published in each reference month’s release of The Daily. Only months whose rate levels appear in a release are shown; September and November 2025 and January to April 2026 are omitted because those releases do not publish the levels. Entries and reopenings are rounded independently of the opening rate, so the components need not sum to it.
Where the series does earn its keep is direction. Through 2025 the closure rate ran consistently at or above the opening rate, and the active business population fell in most months — small changes, but in one direction. Statistics Canada reports that the deviation is above the 2015-to-2019 norm on both sides: in December 2025 the opening rate stood 0.1 percentage points above its historical average and the closure rate 0.2 points above.
Canada created 1.48 businesses per exit in 1984 and 1.13 in 2021. In 2023 the entry rate was 12.3% against an exit rate of 11.9% — a gap of 0.4 percentage points, where in 2022 it had been 3.1. A business population can shrink without any single dramatic year.
Over 1983 to 2012 the entry rate fell from 24.5% to 13.1%, close to a halving, while the exit rate fell from 16.5% to 11.6%. Fewer firms are dying than a generation ago. Far fewer are being born.
Canada's entry-to-exit ratio was 1.13 in 2021 against 1.02 for the United States, and Canada's entry rate is higher than the American one in every year of the published record, at the precision the source reports. On the one comparison that is methodologically clean, Canada does not look bad — it looks like a country declining from a better starting point.
Bankruptcies averaged 0.22% of businesses a year against 9.0% exiting, so insolvency filings capture roughly one exit in forty. They are quoted because they are monthly and go back to 1987. Business closure and business bankruptcy are not the same measurement, and only one of them describes the economy.
Business failure could be read as a household-hardship measure, which would place it with the citizen-outcome metrics. It is not treated that way here. Entry and exit describe the economy's capacity to form and reallocate productive capital — the same question as the startup pipeline, venture capital per capita, and intellectual property generation, all of which sit under Building. The pillar asks whether Canada can still build; the rate at which Canadians start firms, and the rate at which those firms survive, is the most direct available answer.
It also belongs with those metrics for a practical reason: they share a failure mode. Each measures a stage of the same pipeline, and each can look acceptable on its own while the pipeline as a whole is thinning. Read together, the four make a claim that none of them makes alone.