Consumer Payment Card News

U.K. Card Debt Sinks as Double Whammy Emerges

U.K. Card Debt

U.K. card debt ticked downward again in May to an annual rate of 5.5%, its lowest annual growth rate in more than five years. Overall the annual growth rate of consumer credit slowed to 5.6% in May, the lowest growth since April 2014. However, consumer credit increased by £0.8 billion in May, in line with the monthly average increase since July 2018.

According to figures released this morning by the Bank of England (BOE), U.K. consumer credit card lending settled at £72.9 billion for a 5.5% YOY gain in May, compared to a revised £72.8 billion or a 5.8% YOY gain in April, and compared to a revised £72.7 billion for a 6.6% YOY increase for March 2019. One-year ago U.K. consumer credit card lending settled at £71.6 billion, according to figures collected by CardData.

U.K. Consumer Lending

U.K. other consumer loans, advances posted at £144.6 billion for a 5.6% YOY gain in May, compared to a revised £144.2 billion for a 6.0% YOY gain in April, and compared to a revised £143.9 billion for a 6.3% YOY increase for March 2019. One-year ago U.K. other consumer lending settled at £140.3 billion, according to figures collected by CardData.

U.K. total consumer credit reported at £217.3 billion for a 5.6% YOY gain in May, compared to a revised £217.0 billion or a 5.9% YOY gain in April, and compared to a revised £216.7 billion for a 6.4% YOY increase for March 2019. One-year ago U.K. consumer credit card lending settled at £211.9 billion.

The BOE also notes borrowing for other loans and advances fell on the month to £0.5 billion, and credit card lending increased to £0.3 billion. The annual growth rate of consumer credit slowed further reflects the weaker lending flows seen over most of the past year. This was the lowest since April 2014, and well below the peak of 10.9% in November 2016.

U.K. Consumer Spending

The British Office for National Statistics reports in March through May period retail sales increased by 1.6% when compared with the previous three months, with growth across all stores except department stores and household goods stores. In May, online retailing accounted for 19.3% of total retailing, with an overall growth of 8.2% when compared with the same month a year earlier. Clothing sales posted a strong decline of 4.5%.

In March slowing car loans had a major impact on consumer credit growth. The industry showed signs of softness with April representing the 10th straight month of year-over-year retail sales declines, according to CardTrak.

U.K. Consumer Confidence

The GfK Consumer Confidence Index for the U.K. declined to -13 in June 2019, erasing a 3-point rebound to -10 in the previous month and missing market consensus of -11, as global growth concerns and domestic policy uncertainty weighed on sentiment. GfK Strategy Director Joe Staton says U.K. consumers continue to remain concerned about the wider economy, over which the woman or man in the street has no control, of greater worry are the falls in the measures for personal finance. These better reflect our hopes and fears for our everyday financial futures and this, coupled with a decline in the Major Purchase Index, could point to a turbulent time for the economy over the summer months.

U.K. Consumer Outlook

The Brits are facing a double whammy as the Brexit on again and off again has ticked off retailers . . . stockpiling and now overstocked with inventories plus there are solid signs the slowing global economy will add to British uncertainty and discomfort for the remainder of 2019 as the newly set Brexit date of Oct 31 looms notes Senior Analyst Robert McKinley for CardTrak, CardData, and CardFlash.

There is a clear consensus building the British economy may continue contracting through the rest of 2019 and possibly beyond.

U.K. Credit Card Loans (YOY Change)

(seasonally adjusted)

May 2016: £64.8 billion +7.5%
May 2017: £68.2 billion +9.1%
May 2018: £71.6 billion +9.3%
May 2019: £72.9 billion +5.5%

U.K. Other Loans/Advances (YOY Change)

(seasonally adjusted)

May 2016:  £119.7 billion  +11.4%
May 2017: £131.6 billion +11.0%
May 2018: £140.3 billion + 8.5%
May 2019:  £144.4 billion  +5.6%

U.K. Total Consumer Credit (YOY Change)

(seasonally adjusted)

May 2016: £184.5 billion + 10.0%
May 2017: £199.8 billion +10.4%
May 2018: £211.9 billion + 8.8%
May 2019: £217.3 billion + 5.6%

New and Revised figures as of 07/01/19

Note: Lending to individuals is split between lending secured on dwellings (mortgages) and consumer credit. Consumer credit is further split between credit card debt and other loans and advances. Student loans are excluded.

U.K. CardData Monthly/Quarterly Consumer Credit Report

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PERFORMANCE CHARTS [2015-2025]

•   U.K. Consumer Credit Cards Loans (£)

•   U.K. Consumer Other Loans/Advances (£)

•   U.K. Total Consumer Credit (£)

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Source: Bank of England; RAM Research; CardData; CardTrak; CardFlash