Commentary on BoE Money and Credit announcement

“A cocktail of tightening monetary and fiscal policy, mixed with ongoing inflationary pressures, has put the UK economy on ice, as consumers shy away from borrowing to support their buying behaviours. While this cooling of economic activity will be welcome news for the Bank of England, which has been pushing up the cost of borrowing to bring down inflation, the resulting recession will soon lead to an unwelcome hangover for personal finances, and something the central bank will feel compelled to address.

“Right now, in this limbo period, where the cost of borrowing remains at decade-long highs, those on lower incomes are feeling the pinch most as they struggle to cover the cost of essentials such as heating and housing. Our data has found that use of Buy-Now-Pay-Later and so-called ‘Pay Day’ loans by those on lower incomes has been rising in recent months, and as winter bites, with all the financial pressures of Christmas, we would expect this trend to continue.

“The credit sector proved during the pandemic that it can be flexible and empathetic to the needs of people that unexpectedly found themselves in vulnerable financial situations. Now once again, I hope our industry can act as one to protect those that need it from the challenges to come.”

Paul Heywood, Chief Data & Analytics Officer at Equifax UK