Squeeze on lending on credit cards and personal loans follows warnings from Bank of England and others
UK banks are planning the biggest squeeze in consumer credit since late 2008, when the economy was in the depths of recession, according to a Bank of England survey.
The clampdown follows warnings that Britain’s debt mountain has risen to dangerous levels.
The survey showed the net balance of lenders’ expectations for the availability of unsecured lending to households over the next three months fell to -28.6 from -16.2, indicating the sharpest fall since the fourth quarter of 2008, when the UK economy contracted by 2.2%.
Demand for secured lending for house purchase fell slightly in the third quarter and was expected to be unchanged in the final three months of the year.
Banks said they expected the availability of loans to businesses to remain roughly unchanged over the next three months.
However, lenders expected demand for loans for capital investment in businesses to fall at the fastest rate since the third quarter of 2011.