The latest data released by the Finance & Leasing Association (FLA) reveals a 2% decrease in new consumer finance business in May 2024 compared to the same month in 2023. Conversely, the market experienced a 1% growth in new business in the five months leading up to May 2024 when compared to the corresponding period in 2023.
Specifically, the credit card and personal loans sectors collectively reported a 2% decrease in new business in May, while the retail store and online credit sector saw a 7% drop in new business during the same period.
Geraldine Kilkelly, the director of research and chief economist at the FLA, has remarked on these findings, emphasizing that despite the subdued performance in May, the consumer finance market has demonstrated modest growth in new business throughout 2024. Kilkelly also noted that while consumer confidence is strengthening, it has not yet translated into a significant increase in confidence surrounding big-ticket purchases.
Furthermore, Kilkelly highlighted the FLA’s latest research, which suggests an anticipated 4% growth in total UK new consumer credit by value in 2024 compared to 2023. This upward trend is underpinned by favourable developments in real earnings and the potential for lower interest rates. Additionally, Kilkelly urged customers who are apprehensive about meeting their payments to promptly engage with their lenders to explore suitable solutions.
The consumer finance market holds significant weight in the UK’s economy, and the recently published data sheds light on current trends and challenges within this sector. Despite the marginal decrease in new business in May, the overall growth in consumer credit signifies a positive outlook for the market. As the economy and consumer confidence continue to evolve, it will be intriguing to observe how these factors will influence the consumer finance landscape in the forthcoming months.