Cuts to Employment Insurance and increase in Interest rates – what does this mean for Sarnia?

by Joel Sandwith on September 24, 2010

In the past few days there have been several news items related to Canada’s national economy.  Likely the most important is the news that the Bank of Canada has raised interest rates , while suggesting they see the recovery as slowing. This is an interesting situation, usually when interest rates go up it is intended to slow an ‘over- heated economy’ where inflation is rising and the cost of homes is going up.  This helps to stop things like overpriced homes, or prices going above what people can afford.  Yet, the rise in rates, which will make mortgages and other variable rate loans get more expensive, is coupled with the news that things are slowing down.

The other announcements made recently are related to Employment Insurance benefits.  Since the difficulty of the recession of 2008 began to hit us, Employment Insurance benefits had been extended, by five weeks or more depending on how long someone had worked before losing their jobs.  This extension was to give those who had lost their jobs more time to retrain and search for new jobs.  This week the Federal government announced that that program was being cut back .   Typically this type of program isn’t changed very often, but in this case it’s being changed at the same time as the government is considering increasing the cost to the worker (and the employer) of the program itself.   All of this while it appears the number of people receiving EI is increasing.

Taken out of context, the announcements of cuts to EI benefits and rising interest rates would lead us to believe that the economy is growing and the recession is coming to a close.  For many people this is simply not true.  In our Sarnia office every day I speak with and meet with people who are still looking for work, or who have run out of Employment Insurance benefits.

For many people, the result of this recession has been debt.  After losing a job, it may take only two missed paychecks before you find yourself using credit for everyday purchases.  If this continues on too long, the debt can increase very quickly and become very difficult to repay.  The good news is that there are solutions, for example many of our clients are able to repay part of their debt – for them a consumer proposal may be a great solution.  For others, debt repayment is more difficult, and a personal bankruptcy may offer the fresh start they need and deserve.

If things are difficult for you financially, consider giving us a call at 519-344-1058, or toll free at 310-PLAN (7526) – let’s get started on a plan to deal with your debts.

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