British Columbians on the economy: Half say the worst is yet to come

2023-04-11  3 minute read

Linda Paul

MNP Consumer Debt Index

Three in five British Columbians say they will be in financial trouble if interest rates go up much more, up six points since last quarter.

  • Half believe the worst part of the economic cycle is yet to come (50%).
  • A third feel economic conditions over the last six months were worse than they expected (34%).
  • Three in five say they will be in financial trouble if interest rates go up much more (61%, +6pts) and are more concerned about their ability to pay their debts as interest rates rise (57%, -5pts).
  • British Columbians are the most likely to say they already don't make enough to cover their bills and debt payments compared to the other provinces (33%, +2pts).
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VANCOUVER, BC – April 11, 2023 – Personal finances continue to be a major source of stress for British Columbians. Half anticipate that the situation will continue to deteriorate, according to the latest MNP Consumer Debt Index conducted quarterly by Ipsos. When asked about the impact of the current economic conditions in Canada on their personal finances, half (50%) of British Columbians believe the worst is yet to come, while a third (32%) feel we are currently experiencing the worst part of the economic cycle. Only 19 percent feel optimistic enough to say the worst is behind us.

"Between inflation and higher interest rates compounding their debt loads, heavily indebted British Columbians may be justified in believing the worst is still yet to come," says Linda Paul, a Licensed Insolvency Trustee with MNP LTD in the Lower Mainland. "Limited financial wiggle-room in many households highlights the effect of higher interest rates — particularly on those who are not financially equipped to manage it."

A third (34%) of British Columbians feel economic conditions over the last six months were worse than they expected. Two in five (44%, unchanged) report that they are $200 away or less from not being able to meet all of their financial obligations at month's end — including a third (33%, +2pts) who say they already don't make enough to cover their bills and debt payments. Compared to the other provinces, British Columbians are the most likely to say they already don't make enough to cover their financial obligations.

While the number of insolvent British Columbians edges upwards, the average amount of money households have left over at the end of the month has increased slightly to $876 — up $89 from the previous quarter. Still, three in five (61%) British Columbians say they will be in financial trouble if interest rates go up much more, increasing six points since last quarter. The same proportion (61%, +1pt) say they're concerned about the impact of rising interest rates on their financial situation.

Despite interest rates stabilizing after last year's successive increases, Paul notes that British Columbians are not feeling a reprieve yet. Compared to the previous quarter, fewer are confident they can cover all living / family expenses in the next year without going further into debt (52%, -7pts), and about half are concerned about their current level of debt (47%, +4pts). Fewer British Columbians are concerned about their ability to pay their debts as interest rates rise, although more than half (57%, -5pts) are still concerned. The majority of British Columbians continue to be more careful with how they spend their money (83%, -2pts).

"Even as interest rates have steadied, the findings indicate many British Columbians don't have a positive financial outlook, which hints at lingering concerns about inflation and interest rates. Unfortunately, many a financial comfort zone may not be accessible for lower-income British Columbians without a more significant intervention," Paul explains.

"Proactively managing your debt is critical whether you anticipate the worst or hope for the best," advises Paul. "It's important to monitor your budget closely and have an emergency fund to cover any unforeseen expenses such as a car repair or a sudden increase to your debt servicing costs. Additionally, if you receive a tax return this tax season, consider saving it for a rainy day or putting it towards any outstanding debt."

Paul advises that British Columbians struggling to pay their bills should seek professional help right away to avoid a cycle of increasing debt and interest payments, which often lead to longer-term financial hardship.

"Individuals often hesitate to seek help with their debt because of the social stigma surrounding Bankruptcy. This can cause the financial pressure to build and may result in more severe issues, such as wage garnishment and harassing calls from collection agencies," she says.

Licensed Insolvency Trustees are the only professionals who can offer unbiased, customized advice about all of the debt-relief options, including informal debt settlement, Consumer Proposals and Bankruptcy. They can stop or prevent collection calls and wage garnishments, as well as offer legal protection from creditor actions. MNP offers Free Confidential Consultations with Licensed Insolvency Trustees across Canada.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 240 offices from coast to coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3-Minute Debt Break Podcast.

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians' attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.

Now in its twenty-fourth wave, the Index has rebounded to 89 points, up 12 points from the all-time low recorded last quarter. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between March 7 and March 14, 2023. For this survey, a sample of 2,004 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.

National data is available upon request.

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