Economic uncertainty leads to dip in consumer spending

16/03/2011

Economic uncertainty has seen a fall in consumer credit, as the population seek financial management and try to pay off their debts.

The Finance and Leasing Association found that consumer credit fell by 6 per cent in 2010.

In the first half of 2010 there was a 17.9 per cent jump in the number of personal insolvencies from the previous year.

In addition, credit became more difficult to obtain as lenders tightened their criteria, meaning that consumers had their spending involuntarily curbed.


High debt levels, concerns over rising interest rates and increased utility prices are causing consumers to be more cautious of their spending habits.

Kevin Still, Director of EuroDebt, said: “Access to credit has been severely restricted for indebted consumers as lending criteria has significantly tightened. Whilst balance transfers can look attractive, getting a new credit card may prove difficult. Those that can clear unsecured debts look like they are reducing their debt burden but many credit card issuers are reducing credit limits as debt is cleared.

“On a more positive note, the value in 2010 of County Court Judgments (CCJs) against businesses and consumers fell nearly 25% from £3.5 billion to £2.6 billion. This may reflect a change in attitude by some creditors to treat customers fairly and agree to a realistic time to pay arrangements, reflecting the current climate."

A total of £1,153,000,000 purchases are made via credit cards in Britain every day, and at least one consumer is declared bankrupt or insolvent every five minutes, getting on top of finances and seeking free independent help should be on the agenda of indebted individuals.

Despite consumer credit falling in the UK, consumers are advised to seek professional help and advice from a debt management firm to improve their budgeting and take control of their finances.

Tags; Current UK Economy, Income Worries and Debt, Credit Card Lifestyle,

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