The reduction was most pronounced in the secured and unsecured lending markets where new business fell in Q2 2009 by 84% and 43% respectively, compared with Q2 2008. Store instalment credit continued to grow, with new business up by 5% in June and 1% in the second quarter of 2009.
The FLA figures underline the importance of a proportionate response by the Government to concerns about the levels of personal debt. A properly functioning credit market is an essential part of the UK's economic recovery.
Commenting on the figures, Geraldine Kilkelly, Head of Research and Chief Economist, said: "In the last six months we have seen new credit levels continue to fall. The ability of lenders to make available to consumers reasonably priced credit is at risk of being hindered by a barrage of new regulation.
"The FLA's members support responsible lending practices and comply with a strict code of practice to ensure that consumers are treated fairly and are able to make informed decisions when taking loans. But the wave of new regulation from the Government and from Brussels could jeopardise lenders' ability to make available the credit that will undoubtedly be needed to support a sustainable economic recovery."
