An increase of 51 percent was witnessed earlier this year in January in the consumer lending segment compared to the same month a year ago. It is believed the reasons could be rising living costs, high inflation and the Russian invasion of Ukraine. The major spike has been in the personal loan and credit card divisions with a jump of 55 percent, reveals fresh data from the Finance & Leasing Association.
The growth of new businesses is about a quarter compared to January 2021. The strong consumer finance market performance reflects the closures of shops during the third lockdown across the United Kingdom in 2021 due to the spread of another Covid variant named Omicron.
The annual new business in the period was just 2 percent below the level of the pre-Covid period and the UK economy has weakened due to the Russia-Ukraine conflict. Consumer price inflation is on the rise and some economists assume it may touch more than 8 percent by mid-2022.
Disposable incomes of households have been hit high by rise in the interest rates and higher taxes. Consumer spending is now comparatively low. However, consumers are making essential purchases and this paves the path for growth in the FLA finance segment over 2023.
Russia initiated the invasion of Ukraine on February 24 and the conflict now has stepped into the second month in a row amid a couple of failed peace talks. The West has imposed tough sanctions on Russia including a ban on the import of its oil and gas as well as the removal of Russian banks from the international SWIFT payment platform to weaken the countrys economy.
Meanwhile, the Russian troops, tanks and missiles have destroyed most key cities and towns in Ukraine and are expected to soon take control of the capital Kyiv.
The United States and NATO have expressed not to get into direct conflict with Russia in Ukraine fearing the move may pave the path to another world war.
Ban on oil and gas imports has led to a shortage in the supply in most European countries and UK. Prices of food and fuel have jumped high. It is feared the situation may become worse if the war continues for another month.
A statement of US president Joe Biden has lately attracted controversies related to regime change. He said Russian President Putin should not remain in power. Later, his government clarified the words were for moral responsibility to step down.
Amid such updates, China has condemned the ban on Russian oil and gas.