Although there was a drop-off in the use of consumer credit lending following the pandemic primarily due to a build-up of household savings, in recent months there has been a sharp rise in people again returning to credit cards to cope with cost-of-living pressures.
Adults have reported using credit more than usual with credit card lending increasing by 10.6 per cent on the year in March 2022, in contrast with a falling trend in consumer credit in 2020 and 2021.
The ONS Opinions and Lifestyle Survey found that 14 per cent of adults reported using credit more than usual in response to a higher cost of living in May 2022, a rise from 11 per cent in early April 2022.
Over the course of the pandemic, businesses increased their borrowing, particularly for small and medium-sized enterprise and short-term loans. These loans typically contribute a significant share towards total business loans, reflecting businesses’ reliance on bank lending to manage cash flow and operations.
In 2020, there was a large rise in deposits held by households, to the equivalent of 9 per cent of GDP, which largely reflected the effects of “forced” savings in response to coronavirus restrictions. Businesses also increased their deposits holdings to 7.2 per cent of GDP, which may have been a precautionary response to more uncertain business conditions.
