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UK Personal Lending 2009: UK Consumer Credit Market in 2008 and Future Outlook

Datamonitor
May 29, 2009
264 Pages - SKU: DFMN2280598

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Countries covered: United Kingdom

Introduction

The UK consumer credit market has continued to contract in 2008, as various issues such as the liquidity squeeze, high personal debt levels and weaker consumer spending power continued to take their toll on the industry. With few signs of the current situation alleviating for some time, the future of the UK consumer credit market continues to look bleak.

Scope

Covers unsecured personal loans, credit cards, overdrafts, motor finance and retail finance in the UK.
Provides forecasts for gross advances under 3 different scenarios for the consumer credit market as a whole as well as for individual product lines.
Examines the factors that have impacted on the consumer credit market over the course of 2008.

Highlights

Liquidity issues continued to affect lending markets in the UK in 2008. Although the impact of the credit crunch on personal lending markets is less than that on the mortgage market, it has nonetheless contributed to the subdued performance of the consumer credit sector.

Datamonitor expects conditions to deteriorate further during 2009 before a slight improvement in some key economic indicators during 2010, while others will continue to languish. Similarly, there will be growth in some consumer credit product lines in 2010, but others will continue to stagnate.

The government is actively trying to rescue the consumer credit market but is limited by enforceability. In any case, there needs to be some redress of the pact actions of lenders and consumers in order to build a model of sustainable consumer lending and long-term economic growth.

Reasons to Purchase

Gain access to the latest market sizing and forecasting data for the UK consumer credit market to compare your performance with the market's.
Understand how the market is changing and evaluate any opportunities for your business arising from these changes.
Plan your future strategy with confidence using Datamonitor's scenario based forecasts.

DATAMONITOR VIEW: CATALYST; SUMMARY; ANALYSIS; The consumer credit market has deteriorated over 2008; The consumer credit market performed poorly in 2008, with lending considerably weakened although balances outstanding have begun to fall; The credit crunch and recession continue to impede the functioning of the consumer credit market; Base rate cuts during 2008 have failed to help Britain climb out of recession; Lenders have become more conservative in order to cope with the economic downturn; Despite attempts to cut their spending, many consumers need to keep borrowing; Most credit products saw modest falls in gross lending during 2008; Consumers continue to fund short-term borrowing needs with their credit cards; Unsecured personal loans: declined dramatically over 2008; Gross advances on overdrafts have stayed relatively stable over 2008; The last quarter of 2008 saw a sharp decline in point of sale retail finance; Point of sale motor finance fell dramatically in the second half of 2008; Personal loans strengthened their market share over the past five years; Economic conditions will continue to deteriorate in 2009 before improving in 2010; Datamonitor's forecasting model explained; Difficult times will continue for the UK economy, with negative GDP growth and a falling housing market; Falling inflation allowed the Bank of England to cut its base rate but there has been little economic impact; Retail sales lifted somewhat in Q4 2008 but car sales figures are bleak; House prices continue to fall with no end in site to the price correction; 2009 will not herald respite from economic and financial difficulties, even under Datamonitor's neutral scenario; Datamonitor also analyzes two different scenarios - one more pessimistic, the other more optimistic; Measures are being taken by the government to aid the consumer credit market but any long-term change requires changes in behavior on the part of the industry and consumers; A lending panel was created late in 2008 to monitor loans to households and businesses; But the Lending Panel also faces an almost impossible challenge; Ultimately sustainable consumer lending requires a responsible industry and more cautious consumers; Under the Consumer Credit Act, fixed-sum credit agreements will require annual statements
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, Q4 2006-Q4 2008; Table 2: Retail savings and investments in the UK, 2004-2008, GBP million; Table 3: Net inflows of retail savings and investments, 2004-Q3 2008; Table 4: UK consumer credit gross advances by product, Q4 2006-Q4 2008 (£m); Table 5: Market share of consumer credit balances outstanding by product line, 2004-2008; Table 6: Datamonitor's updated macroeconomic variables for 2008-13: neutral scenario; Table 7: Datamonitor's updated neutral consumer credit forecast by product line, 2008-13 (£bn); Table 8: Datamonitor's updated pessimistic consumer credit forecast by product line, 2008-13 (£bn); Table 9: Datamonitor's updated optimistic consumer credit forecast by product line, 2008-13 (£bn); Table 10: UK consumer credit balances outstanding by product, Q4 2006-Q4 2008 (£m); Table 11: Datamonitor's updated macroeconomic variables for 2008-13: pessimistic scenario; Table 12: Datamonitor's updated macroeconomic variables for 2008-13: optimistic scenario
List of Figures: Figure 1: Total consumer gross lending has slumped over 2008 and the rate of growth of balances outstanding started to decline in Q4 2008; Figure 2: Savings and investments in the UK fell in 2008; Figure 3: UK investors have pruned back their holdings in bonds, shares and mutual funds; Figure 4: There have been declines for most products although overdrafts saw relatively flat year-on-year percentage growth throughout 2008; Figure 5: Unsecured personal loans have continued to increase their market share of balances over the past five years

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UK Personal Lending 2009: UK Consumer Credit Market in 2008 and Future Outlook

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