UK Consumer Credit: Forecasts and Future Opportunities to 2023

UK Consumer Credit: Forecasts and Future Opportunities to 2023

Summary

The UK consumer credit market experienced challenging conditions in 2019. Lending in 2020 is set to rise by 5%, but overall growth will remain flat at around 4-5% throughout the rest of the forecast period. This means gross advances are expected to total £372.4bn by 2023. The following factors will drive the market over the next few years:

Supply side: Stricter lending criteria, high incidences of bad debts, and the Prudential Regulation Authority’s intent to impose a more stringent regulatory regime - together with a cautious approach towards unsecured lending among providers - will curtail the credit supply growth rate over the forecast period.

Demand side: Demand for credit will likely hold due to the slow pace of economic growth, high levels of existing household debt, and low levels of productivity on the macroeconomic front. Weak retail sales, which reflect consumers’ reluctance to spend, will also adversely impact the appetite for lending.

This report offers five-year gross lending forecasts for the consumer credit market up to 2023. It offers insight into the key macroeconomic, regulatory, and other factors that will drive demand and supply over the next five years. It also provides an outlook for total consumer credit including overdrafts, P2P lending, motor finance, payday lending, home credit, credit cards, and retail finance.

Scope

- Overdrafts will be in decline as the Financial Conduct Authority encourages banks to reform their overdraft practices and customers adjust their spending habits to avoid high-cost borrowing lines.
- Motor finance sector growth contracted, falling to 3.1% in 2019. New car sales are decreasing, and the excess of vehicles that will enter the used car market over the next few years will bring down prices.
- The payday lending sector suffered a huge contraction due to tougher regulation, including strict price caps and comprehensive affordability checks. This resulted in several lenders exiting the industry.

Reasons to Buy

- Develop more targeted strategies through the analysis of key consumer credit market developments.
- Inform your future plans with our five-year forecast of gross advances for all credit lines.
- Analyze trends with details of historic gross advances across a range of credit lines.
- Benchmark yourself against competitors and ensure you remain competitive as new innovations begin to enter the market.
- Be prepared for how regulation will impact the consumer credit market over the next few years.