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Business Briefing Almost half of Canadians polled say they’re just $200 away from insolvency

Briefing highlights

  • Many Canadians close to insolvency
  • Stocks, loonie, oil at a glance
  • Twitter shares jump on earnings
  • News ticker
  • Required Reading

Going broke

Almost half of Canadians polled say they’re dangerously close to insolvency.

And their numbers are rising, particularly in Eastern Canada, according to the latest Ipsos survey done for insolvency firm MNP Ltd.

MNP has been tracking the number of Canadians who say they’re just $200 or less away from insolvency each month.

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That percentage now stands at 48 per cent, up from 46 per cent in December, MNP said of the Ipsos survey of almost 2,100 Canadians, conducted in mid to late March.

About one in four Canadians say they have no room to juggle their payments at the end of each month, the survey also showed.

“When there is this little room in the household budget, people can easily get trapped in an endless cycle of debt,” MNP president Grant Bazian said in releasing the survey this week.

“This isn’t simply a matter of people living beyond their means,” he added.

“The reality is that too many households simply cannot make ends meet, however hard they try.”

The percentage of people who say they’re within $200 of insolvency is highest in Atlantic Canada, at 55 per cent, which is notable, too, in that it marks a jump of 10 percentage points since December.

Other regions: Quebec, 51 per cent, which is up 5 percentage points; Ontario, 48 per cent, up 2 points; Alberta, 48 per cent, unchanged; Saskatchewan and Manitoba, 46 per cent, down 10 points; British Columbia, 39 per cent, down 2 points.

The MNP report comes amid heightened concern over swollen debt levels among Canadians. Indeed, 47 per cent said they could be in trouble if interest rates rise.

A reprieve is at hand, however. Having raised its benchmark overnight rate to 1.75 per cent, the Bank of Canada is now on hold, and expected to stay that way for quite some time yet.

We’ll hear more about this Wednesday when the central bank releases its rate decision and monetary policy report.

It won’t change that key rate, of course. And, for the purposes of this discussion, expect Bank of Canada governor Stephen Poloz, senior deputy governor Carolyn Wilkins and their colleagues to warn again about the threat from household debts even as the pace of credit growth has slowed markedly.

The MNP findings are in line with the latest numbers from the Office of the Superintendent of Bankruptcy Canada, which show insolvencies on the rise.

They also fit with a recent survey released by the Organization for Economic Co-operation and Development, which showed 51 per cent of Canadians concerned about meeting daily expenses.

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Insolvencies come in two forms: Outright bankruptcies and proposals, under which people restructure their debts with their lenders.

The number of insolvencies rose 5.4 per cent in February from a year earlier, to 10,300, but bankruptcies declined 5.7 per cent while proposals climbed 14.3 per cent.

Some interesting tidbits from the MNP report: Many Canadians say they’ll have to borrow more to meet their expenses in the next year.

There were some optimistic signs in the report, as the number of Canadians who say they’re tapped out by the end of the month declined to 26 per cent from 31 per cent. Of course, as MNP pointed out, “this still leaves a quarter of Canadians struggling to make ends meet.”

At the same time, many believe their financial position will improve over the course of the next year, and many more over the next five years.

(Are you a homeowner worried about debt? If you would like to share your story with The Globe and Mail, contact reporter Rachelle Younglai at ryounglai@globeandmail.com .)

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Markets at a glance

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Twitter jumps on earnings

Twitter Inc. shares climbed after the company posted hefty gains in profit and revenue for the first quarter.

Twitter profit rose to US$190.8-million, or a quarter a share, from $61-million or 8 US cents a year earlier.

Revenue climbed to US$786.9-million from US$664.9-million.

Its “monetizable daily active users” rose 12 per cent to 134 million.

Twitter described the quarter as “a solid start to the year.”

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Ticker

China slams Iran sanctions

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From Reuters: Beijing again lashed out at a U.S. decision to impose sanctions on countries that buy Iranian oil, calling it a violation of China’s interests that will intensify turmoil in the Middle East and international energy markets.

Procter & Gamble tops estimates

Also from Reuters: Procter & Gamble Co.’s quarterly revenue beat Wall Street estimates, as it sold more beauty, fabric and home care products.

Coke beats estimates

Also from Reuters: Coca-Cola Co. beat estimates for quarterly sales, selling more water, sparkling soft drinks as well as new flavors of its signature sodas.

Also

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Required Reading

Chinese investment in hotels declines

Beijing’s crackdown on foreign investments is deterring Chinese companies from making large purchases of Canadian hotels, Rachelle Younglai reports.

Tims franchisees vote on settlement

Retailing reporter Marina Strauss looks at how the long-running battle between Tim Hortons and its franchisees is nearing an end.

‘Guiding light’

Canadian architect Raefer Wallis is being hailed as a ‘guiding light’ in the pursuit of healthier buildings. Asia correspondent Nathan VanderKlippe reports from Shanghai.

Green bond market expands

In Streetwise, capital markets reporter Alexandra Posadzki looks at how the Canadian green bond market is expanding as more companies look to raise money for environmentally friendly projects.

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If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

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