UK Consumer Credit Market Outlook: Q2 2009 : Market Research Report

UK Consumer Credit Market Outlook: Q2 2009

Published by: Datamonitor

Published: Oct. 2, 2009 - 20 Pages

DATAMONITOR VIEW
CATALYST
SUMMARY
ANALYSIS: The second quarter of 2009 saw a slight improvement in some credit products; The consumer credit market showed some signs of recovery in Q2 2009; There was negative year-on-year growth for all product lines in Q2 2009, but it was an improvement on Q1 2009; Despite the Bank of England's policies filtering through into the economy, lenders and borrowers remain reluctant to lend; It is unclear whether the Bank of England's move to boost the amount set aside for quantitative easing will have the desired impact; Lenders' aversion to risk is leading them to lend predominantly to existing customers; Borrowers are cutting their reliance on credit in order to survive the downturn; Datamonitor expects conditions in the credit market to pick up from 2010 onwards; Datamonitor's forecasting model explained; GDP is expected to struggle in the remainder of 2009 before showing a moderate recovery in 2010; Unemployment continues to rise as the economic turmoil feeds through the economy; The Bank of England has maintained an historically low base rate; Retail sales grew but new car registrations and used car sales dropped; House prices are showing signs of leveling out; The Datamonitor scenario will see all credit products struggling in 2010 before returning to growth by 2011; Datamonitor has also considered two additional scenarios; Under the pessimistic scenario, there will be a potential double-dip recession; Under the optimistic scenario, the recovery would be more pronounced; Regulatory bodies are looking at ways to improve conditions for consumers in the market; The Financial Services Consumer Panel wants the FSA to regulate consumer credit; The OFT has launched an investigation into high cost credit; The number of unsecured personal loan providers continues to fall
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, Q2 2007-Q2 2009; Table 2: UK consumer credit gross advances by product, Q2 2007 to Q2 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, Q2 2007 to Q2 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: Year-on-year outstanding balances were flat in Q2 2009 and gross advances fell by less than they did in Q1 2009; Figure 2: The year-on-year rate of decline slowed for all product lines in Q2 2009; Figure 3: More than three-quarters of consumers will not use credit to maintain their lifestyle given the economic downturn

Abstract

Introduction

The UK consumer credit market showed signs of a mild improvement in Q2 2009 although the overall market has slumped considerably from its peak in 2007. This latest edition of Datamonitor's quarterly outlook series discusses recent developments in the consumer credit market and provides updated forecasts for the period 2009-2013.

Scope

Provides the latest market sizing data for the UK consumer credit market.
Covers an array of consumer credit lines - unsecured personal loans, credit cards, overdrafts, retail finance and motor finance.
Uses the latest developments in the UK economy in order to build up three forecast scenarios that extend to 2013.
Includes a complementary interactive Excel model.

Highlights

The year-on-year decline in consumer credit gross advances has slowed to -13.7% in the second quarter, up from a nadir of -15.4% during Q1 2009. Nevertheless, gross advances are continuing to fall year-on-year as lenders remain reluctant to lend due to their perception of the risks involved.

Unsecured personal loan gross advances saw the poorest performance of all consumer credit lines in Q2 2009. There was a year-on-year decline of 31.8%, although this was a smaller drop than in either of the previous two quarters. Overdrafts saw the strongest improvement in the rate of year-on-year decline.

Datamonitor research shows that consumers are still wary of using credit products. A small minority of respondents stated that they were considering credit products to maintain their lifestyle. The results are consistent with a large drop in consumer confidence as they look to rein in their spending habits.

Reasons to Purchase

Review the market performance in Q2 2009 as a benchmark by which to evaluate your own performance.
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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UK Consumer Credit Market Outlook: Q2 2009

Table of Contents

Abstract