Consumer Credit Drops, Increasing Pressure on Business Finances
27th February 2018.
British families are showing a renewed interest in their personal finances as borrowing and credit are slashed for the first time since mid-2013. This could have a knock-on effect on businesses as the new cautious customer spend less and save more.
The UK has experienced a consumer credit boom for the last few years, until Bank of England Governor, Mark Carney, finally warned lenders last year to tighten their lending standards. Since then, lenders have cut a “significant amount” of available credit, which along with the higher interest rates, have accounted for the largely diminished desire to borrow. While this is good news for personal finances and should lead to a reduced debt pile as a result, this will have a negative impact on retailers. Those businesses who rely on customer engagement will see a lessened demand, as fewer shoppers spend their cash on non-essential items.
With smaller demand threatening cash flow, but higher borrowing rates threatening loans, businesses need an alternative way to revive their business. Perhaps investing in a more digitised workplace will encourage more customers, or a larger office, or a new coffee machine; either way, acquiring the services of a credit manager could help. Rather than a banker, we will not demand more than you can afford, and unlike an alternative finance platform, we will not demand a part of your business in return. At the Credit Protection Association, our debt recovery services will recover money that you are owed and put you back on the high street in a better shape than before.
Retailers are seeing the consequences of more conscientious consumers, who now have a renewed enthusiasm for paying off their debts. Credit card repayments averaged £9.8 billion per month over the last year, up from £9.5 billion over the previous 12 months and £9.2 billion in the year before that.
While house prices are still higher than incomes, mortgage loans picked up this month by 11 percent, bringing the total to 40,117. Consumers are no longer timid with splashing out on ‘big ticket items’ but are still only spending on essential items, leaving indulgences like clothes and entertainment as lesser priorities.
The financial climate of the UK is changing. Since the financial crisis back in 2008, consumers have gone through a multitude of different personas, from shoppers-til-you’re-droppers to strict savers, to indulgers, to back again. Now that Brexit uncertainty lulls over the country, many are unsure what the future will bring and are preparing accordingly. This renewed caution in regards to personal finances will disappoint retailers as cash flow will be threatened by a stunted demand.
At the Credit Protection Association, we aid many of our members when their cash flow is under threat. Our debt recovery services recover money that is owed allowing owners to expand their services and create new ways to encourage their customers to spend. Our credit management products will also ensure their finances stay in good shape and aren’t further threatened by late payers and non-payers.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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