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Fall in consumer credit reflects economic uncertainty, says FLA
Consumers take ‘wait and see’ approach to long-term commitments
The latest figures released by the Finance & Leasing Association (FLA) suggest that many consumers are waiting to see what happens in the wider economy before making credit commitments. The statistics show that consumers used 8% less credit overall in the year to May 2010 than in the 12 month period to May 2009.
The FLA also reported a greater fall in larger financial commitments such as second charge mortgages and unsecured loans, which fell 67% and 45% respectively. The association puts the continuing trend down to economic uncertainty creating a ‘wait and see’ attitude to long-term credit, rather than a limited supply of such.
Fiona Hoyle, FLA Head of Consumer Finance, said: “In uncertain economic times, consumers want to take even more control over their financial commitments. This is reflected in a more cautious approach to consumer credit spending. Many consumers will also be waiting to see what effect the proposed VAT rise and spending cuts will have on their household budgets.
“The consumer credit market plays an important role in the economy and the Government needs to help maintain consumer confidence,” she added.
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