31 May 2006
The latest lending figures released by the Bank of England suggest that consumers are searching the market for cheaper ways of financing their spending plans, according to a senior economist.
Lending to private individuals picked up in April, but its fragile nature is a sign of increasing caution from consumers, says Howard Archer, chief UK and European economist for Global Insight.
"Although unsecured consumer borrowing picked up in April, it was still far from robust. This indicates that consumers are cautious about taking on more debt, or at the very least are looking to find less expensive ways of financing their spending," said Mr Archer.
Historically high levels of indebtedness have combined with rising unemployment and increasing concern for pensions requirements to force consumers to be more careful with their finances.
"This reinforces our belief that the upside for consumer spending will be limited for some time to come," added Mr Archer.
"The pressure on consumers to improve their balance sheets will be heightened if the Bank of England raises interest rates any time soon."
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