Reports highlight tight card markets
By UK CreditCards.com
Britain could face a contraction in credit provision due to financial losses at banks caused by rising customer defaults on credit cards and loans.
The International Monetary Fund (IMF) suggested that financial firms around the world were facing balance sheet difficulties which would translate into tougher criteria for corporate and consumer borrowers. In all, demand for credit in the UK was expected to outpace supply at a rate equivalent to 15% of GDP next year.
This is a far higher ratio than those forecast for other major nations. Elsewhere in the report, the IMF said that Britons "traditionally rely more heavily on credit cards for borrowing" and that the UK "appears most susceptible to credit constraints."
It added: "In Europe, with credit card delinquencies rising -- especially in the UK, Ireland and Greece -- consumer credit markets have come under pressure."
The Bank of England also released figures today which highlighted the continuing tightness in credit criteria. According to a survey of lenders conducted by the institution, the availability of unsecured credit to households has diminished over the last three months and is likely to fall further over the next three.
Meanwhile, 11% more lenders reported a fall, rather than a rise, in credit card demand from applicants over July to September 2009.
Published: 2 October 2009
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