Spending Falls Due To Job Fears

(Press Association) – CAUTIOUS CONSUMERS are continuing to shun debt-fuelled spending sprees amid fears over unemployment, industry figures showed.

Consumer credit levels fell 18% in May, compared with the same month a year ago, to £4.35 billion, according to the Finance & Leasing Association (FLA).

The trade body highlighted an 85% plunge in loans secured on properties as access to credit remains adversely affected by a lack of liquidity across many parts of the market.

Only the hire purchase market, which enables people to buy household items typically costing less than £1,000, such as televisions and sofas, saw an increase, with lending levels rising 7% to £209 million.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: ‘Access to wholesale funding remains a problem for lenders. And, with lower average earnings’ growth and a higher risk of unemployment, consumers are thinking carefully before taking on further credit commitments.

‘Store instalment credit allows customers to borrow in a very controlled way for a particular purchase, with repayments being easily planned within their household budget.’

The FLA added that the value of direct unsecured loans in May fell 42% on a year earlier to £290 million.

Lending on credit cards was down 11% year on year, to £2.64 billion, while the decline in secured loans took the total for the month to just £39 million.

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