According to a new Consumer Debt Index report, inflation and rising interest rates are putting enormous pressure on Atlantic Canadians.
“Many households need to take on more debt to be able to pay off their existing debt,” said Tina Powell, MNP’s insolvency trustee, who added that as interest rates continue to rise, the cost of servicing household debt will also rise soon.
“Which will lead to a cycle of debt that is almost impossible for people to get out of.”
The Consumer Index report from MNP, an accounting and business advisory firm in Canada, is broad in scope and focuses on a multitude of concerns for Atlantic Canadians today.
In its data collected for Atlantic Canada, MNP found that:
57% of Atlantic Canadians say they are beginning to feel the effects of interest rate hikes
64% say rising interest rates hurt their financial situation
43% say rising interest rates could bring them closer to bankruptcy
60% say they are $200 (or less) away from not being able to meet their financial obligations
“Everyone is still shackled by what they have in the checking account,” said Halifax resident Alex Perry, who also said he sees a positive path forward.
“I am convinced that it is a good labor market and that there would be ample room to support public spending in order to come out of this crisis.”
Perry also said the pandemic may not be the best time to gauge consumer confidence.
“It’s still a tough time for all of us and until it all starts again,” Perry said. “But the sun is rising and people are ready to get back to their lives after COVID.”
According to the MNP report, while many households in Atlantic Canada are struggling financially, the overall situation is not much better outside the region.