In Q2 of 2022, business insolvencies climbed 30.9% compared to the same time last year, and they're up 26.3% from the first six months of the year
Business and consumer insolvencies are marching higher, as climbing interest rates and crushing inflation fuel economic uncertainty, according to an insolvency industry group.
The rising number of insolvencies are directly related to higher inflation and interest rates, CAIRP said. Plus, interest rates are rising at a fast clip, a shock for some people’s finances. The Bank of Canada has pledged to keep hiking rates to wrestle soaring inflation back to its two per cent target.hit 8.1 per cent in June from a year earlier, a level not seen in decades. That’s left Canadian consumers wrestling with growing debt costs from rising interest rates, while trying to manage higher prices of essentials at the same time.
Inflation and rising rates are also dinging business balance sheets, and are especially painful for those organizations who have not fully recovered from pandemic losses. Business insolvencies are likely to grow in the months ahead, CAIRP said, with some sectors getting impacted more than others. Those include construction, transportation and warehousing.
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