UK Consumer Credit Market Outlook: Q1 2009: Industry Research Report

UK Consumer Credit Market Outlook: Q1 2009

Published Date: June 2009

Published By: Datamonitor

Page Count: 19

Order Code: R313-52323

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DATAMONITOR VIEW
CATALYST
SUMMARY
ANALYSIS: The reduction in consumer credit slowed in the first quarter of 2009; The consumer credit market declined for the fifth consecutive period in Q1 2009; The rate of decline seen across unsecured personal loans and motor finance slowed in Q1 2009; Despite drastic moves by the Bank of England, lenders and borrowers are shying away from credit products; The Bank of England has moved towards a policy of quantitative easing; Lenders continue to pursue conservative strategies as the prevailing economic conditions remain difficult; Consumers are becoming more aware of the need to organize their finances; Datamonitor expects conditions to remain tough during 2009 before improving in 2010; Datamonitor's forecasting model explained; Further falls in GDP and soaring unemployment show that the UK economy remains in turmoil; Falling inflation has allowed the bank to maintain an historically low base rate; Retail sales dropped but new car and used car registrations grew in the first quarter; There were further reductions in house prices; Under the Datamonitor scenario, all credit products will have a difficult 2009; Datamonitor has also considered two additional scenarios; Under the pessimistic scenario, there will be a longer contraction in the economy; Under the optimistic scenario, the recovery will come sooner and be more pronounced; The government is introducing new measures to regulate the consumer credit market; The government is looking to prevent the unsolicited raising of credit card limits; The OFT is conducting a review on the fairness of competition in the consumer credit market; Consumers are turning to loan sharks in desperation as the credit crunch continues to bite
APPENDIX: Supplementary data; Definitions; Bank of England base rate; Balances outstanding; CAGR; CCJ; Consumer credit; Gross advances; OFT; Overdraft; Methodology; Forecasting methodology; Choice of economic variables; Model outputs; Bespoke scenario-based forecasting; Further reading; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: Quarterly total consumer credit gross advances and balances outstanding in the UK, Q1 2007 to Q1 2009; Table 2: UK consumer credit gross advances by product, Q1 2007 to Q1 2009 (£m); Table 3: Datamonitor's updated macroeconomic variables for 2008-13: Datamonitor scenario; Table 4: Updated Datamonitor view consumer credit forecast by product line, 2008-13 (£ billion); Table 5: Datamonitor's updated pessimistic consumer credit forecast by product line, 2008-13 (£ billion); Table 6: Datamonitor's updated optimistic consumer credit forecast by product line, 2008-13 (£ billion); Table 7: UK consumer credit balances outstanding by product, Q1 2007 to Q1 2009 (£m); Table 8: Datamonitor's updated macroeconomic variables for 2008-13: pessimistic scenario; Table 9: Datamonitor's updated macroeconomic variables for 2008-13: optimistic scenario
List of Figures: Figure 1: Both gross advances and balances outstanding continued to decline on a year-on-year basis; Figure 2: All products experienced negative year-on-year growth in Q1 2009; Figure 3: The rate of interest paid for a loan of £5,000 grew by 44% over two years; Figure 4: The majority of respondents said they plan to save more in the future