Industry figures show that UK consumers are continuing to adopt a cautious approach to spending, with just the store card sector bucking the trend.
Consumer credit provided by members of the Finance & Leasing Association (FLA), who were responsible for 30 per cent of all unsecured lending in 2008, fell by 18 per cent in May compared to the same month last year.
FLA consumer finance lending totalled just over £56 billion in the year to May, a 15 per cent fall on the previous 12 month period.
The body said access to credit has been adversely affected by the lack of liquidity across many parts of the market, especially secured loans which have contracted by 73 per cent over the last year.
Conversely, the store card market recorded an eight per cent increase in new business in the quarterly period to May, with £649 million lent in the period.
Credit card lending also took a hit, although the falls were not as pronounced as in other finance fields. In the annual period to May, just over £33 billion of credit card ending was given to consumers by FLA members – a decrease of six per cent.
"Access to wholesale funding remains a problem for lenders," said head of research and chief economist at the FLA, Geraldine Kilkelly. "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."
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