This is the implication of the latest consumer credit figures from the Finance & Leasing Association.
The statistics show that consumers used 8% less credit in the 12 months to May than in the 12 month period to May 2009.
The statistics also show a greater fall in larger financial commitments like second charge mortgages and unsecured loans, which were down 67% and 45% respectively over the same period; continuing a trend that began with the credit crunch.
Economic uncertainty seems to be causing people to take a ‘wait-and-see' attitude towards longer-term consumer credit. Short-term credit arrangements like credit cards are only down 7% in the 12 months to May compared with the previous year.
Fiona Hoyle, FLA head of consumer finance, said: "In uncertain economic times, consumers want to take even more control over their financial commitments. This is reflected in a more cautious approach to consumer credit spending.
“Many consumers will also be waiting to see what effect the proposed VAT rise and spending cuts will have on their household budgets.
"The consumer credit market plays an important role in the economy and the Government needs to help maintain consumer confidence.
“So we urge the Treasury and the Department for Business to pause while lenders make the regulatory changes to the market that are already in the pipeline, before risking any more uncertainty by proposing new ones."
