11 July 2006
Consumers could be changing their behaviour in the face of rising debt and the threat of an increase in interest rates, according to an industry expert.
Many commentators have recently speculated that a slight increase in interest rates may be on the cards in the near future, but an economist from HSBC is claiming that consumers are beginning to tighten their belts.
John Butler, chief UK economist at HSBC, said that he had observed consumers becoming "a lot more choosy" and "trying to rebuild their balance sheets".
"The consumer isn't panicking," Mr Butler said.
"I don't think it is a done deal that we will see a rate rise," he said, adding: "It is not what rates do – but the expectation of what they do".
Last week the Bank of England's monetary policy committee again voted to hold interest rates steady at 4.5%, leaving the rate unchanged for the 11th consecutive month.
The Lloyds TSB consumer barometer for June showed clear signs that almost two thirds of people expect interest rates to go up in the next 12 months, though fears over rising prices and inflation are falling slowly.
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