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

Published by: Datamonitor

Published: May. 29, 2009 - 264 Pages

Table of Contents

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

Abstract

• 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.

• 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.

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