The Bank of England’s latest figures show that consumers are paying down unsecured debts at levels not seen since 1993.
Consumers have repaid credit card and personal loan debts at the highest rate for almost 20 years according to the Bank of England latest figures.
It said that there was a net repayment of £0.4bn in unsecured lending in December – the largest such repayment since records began in 1993.
Howard Archer an economist at Global Insight said the record net repayment in consumer credit in December highlighted not only very low consumer appetite for new taking on new borrowing but also the “strong desire” of many consumers to reduce their debt.
He added: “Consumer desire to get a tight grip on their finances is clearly the consequence of current heightened concerns over the outlook for the economy and jobs. Consumer confidence was at one of the lowest levels on record in December, and while it rose in January, it was still extremely weak compared to long-term norms.”
However, Mr Archer said that the trend may not last and warned that there was a possibility that there could be an increase in “stressed borrowing” with more people having to borrow to boost their income amid a deteriorating economy.