province now lags behind Nova Scotia and New Brunswick in terms of business
confidence. Only a year ago, Ontario ranked third among all provinces, just
behind the vibrant economies of Alberta and British Columbia.

Small- and medium-sized enterprises create about half of Ontario’s
economic output. The CFIB Quarterly Business Barometer Index for Ontario
reflects how well these businesses expect to perform in the next 12 months.
The latest results show the index continuing a downward trend, losing one more
point since September to stand at 106.3.

Perhaps surprisingly, confidence in the retail sector plummeted seven
points in the fourth quarter of 2006 – just when holiday shopping was expected
to lift confidence. Results in the hospitality, construction and manufacturing
sectors held steady.

Encouragingly, the business services, transportation and agri-business
sectors showed improvement, although not enough to lift the overall results
for the province. “Despite some positive signs in a few sectors, Ontario
businesses are less optimistic than they were even three months ago,” said
CFIB’s Ontario Vice-president, Judith Andrew. “If Ontario is to regain its
competitiveness, it will need better public policies and legislative
amendments. The upcoming provincial budget is an excellent opportunity for the
McGuinty government to boost optimism in the province by lowering taxes and
the overall burden of red tape and regulation on businesses.”