News
Falling credit demand reflects economic uncertainty
Low consumer confidence in the economy is affecting the take-up of consumer credit products. This is the implication of the latest consumer credit figures from the Finance & Leasing Association, which show that consumers used 8% less credit in the 12 months to June 2010 than in the previous 12 months.
Despite this, FLA members lent £12.5 billion to consumers in Q2 – the equivalent of £200 for everyone in the UK. Demand for credit is lower than last year, but many people are still using credit cards, store cards, instalment credit and loans for everything from furnishings, electronics, home improvements, cars and holidays to smaller everyday items like clothes and eating out.
Fiona Hoyle, FLA Head of Consumer Finance, said:
“This month’s figures suggest that consumers are uncertain about the economy. It may be that they are waiting to see the impact of public sector expenditure cuts on disposable income before making any long-term repayment commitments on credit.
“The statistics show that the credit market is still weakened. Last month, the Government announced a review of consumer credit and personal insolvency to take place in the autumn. This will allow both consumers and lenders to have their say about what regulatory improvements should be made to allow for the smooth operation of the credit market. But the Government will need to tread carefully with any subsequent proposals to avoid further weakening an already depressed market.”
Table 1: New consumer credit lending, June 2010
| Jun 10 | % change | Q2 2010 | % change | 12 months to Jun 2010 | % change | |
| Total FLA consumer finance (£m) | 4,271 | -8 | 12,536 | -7 | 51,495 | -8 |
| Store cards (£m) | 169 | -17 | 524 | -15 | 2,381 | -12 |
| Credit cards (£m) | 2,555 | -9 | 7,580 | -9 | 31,121 | -7 |
| Store instalment credit (£m) | 160 | -32 | 485 | -26 | 2,353 | -7 |
| Second mortgages (£m) | 23 | -15 | 62 | -17 | 318 | -59 |
| Direct unsecured loans (£m) | 190 | -33 | 532 | -39 | 2,252 | -44 |
| Car finance (£m) | 1,092 | +13 | 3,098 | +14 | 12,206 | +12 |
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Note to editors:
In 2009 FLA members provided £72.5 billion of new finance to UK businesses and households. £53.2 billion of this was in the form of consumer credit, which was a third of all unsecured lending in the UK. And £16.5 billion of it supported the purchase of 46% of new car registrations in the UK.
For further media information, please contact:
Helen Saxon, FLA
T: 020 7420 9664 E: helen.saxon@fla.org.uk M: 07918 766 993