UK Consumer Credit Market Outlook: Q1 2009

Published by: Datamonitor

Published: Jun. 17, 2009 - 19 Pages

Table of Contents

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

Abstract

• Provides the latest market sizing figures for the UK consumer credit market.
• Covers an array of consumer credit lines - unsecured personal loans, credit cards, overdrafts, retail finance and motor finance.
• Considers the latest developments in the UK economy in order to build up three forecast scenarios for the next four years.
• Includes an accompanying interactive Excel model.

• Review market performance in Q1 2009 to place your own performance in context with the overall market.
• Use Datamonitor's market forecasts to plan your future strategy with confidence.
• Understand how the ongoing liquidity crisis has affected lenders and the overall economy.

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