UK consumers react to credit crunch

Thursday, June 24th 2010

New figures suggest there has been a significant tightening of the purse strings by Britons over the last year.

Statistics revealed by the Finance and Leasing Association (FLA) show the amount of credit taken by consumers in April was nine per cent lower than in the same month a year earlier.

Similarly, there was a 14 per cent drop in the amount borrowed on store cards and a 12 per cent decrease in the total spent on credit cards.

Fiona Hoyle, head of consumer finance at the FLA, says: "Today's figures show how fragile the consumer lending markets remain. The government should help reduce uncertainty in the markets by clarifying its plans for consumer credit regulation."

In addition to the fall in the use of cards, there has been an overall 42 per cent decline in the amount of borrowing taken via unsecured loans, which could further emphasise the desire of Britons to save their way out of trouble.

The Credit Action report for June revealed the average UK household is in more than £57,000 of debt.