Consumers reduced debts in October

| November 23, 2012 | 0 Comments
Consumers reduced debts in October

Consumers focused on repaying personal loans and overdrafts in October according to the British Bankers Association.

Continuing concern about economic conditions prompted consumers to make a net repayment of £207 million of unsecured debt, while lending to companies increased slightly.

The fall in consumer confidence was reflected in a fall in retail sales during the month.

There was a £219 million increase in net credit card borrowing during the month, but this was more than offset by the net repayment of £426 million in personal loans and overdrafts.

October’s fall in consumer credit follows a £76 million increase in September, but this was only the second rise in the last six months and the general trend is for consumers to pay off debt and increase their savings.

David Dooks, the BBA’s statistics director, said: “Households are reducing borrowing requirements and have no appetite to take on more and new debt.

“Where they can, individuals are putting money aside for household expenditure.”

Despite worries over the economy and a fall in disposable income, consumers are expected to spend slightly more on Christmas this year, than they spent last Christmas.

According to a report from SAS UK and Verdict, Britons will spend around £86bn on Christmas this year, an increase of 1 per cent from 2011.

The increase will be driven by food sales which are expected to be 2.9 per cent higher in the final quarter of 2012 than they were in the 2011 same period, but this is mainly due to rising prices and inflation.

Online retailers look set to do well, with consumers looking for online bargains rather than shopping in high street stores.

Online sales are expected to account for 10.6 per cent of the total retail spend in 2012.

Cindy Etsell, head of retail, SAS UK & Ireland, said: “Click and collect and M-commerce will be particularly attractive for the time-pressed over Christmas.

And, while spend is up, volume is down and so discounting is expected to be a big part of retailers’ strategies.”

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