May 29, 2008
Reduced credit card spending could lead to recession
Financial institutions which specialise in credit based products are continuing to struggle under the weight of the credit crunch. Credit card holders are beginning to feel the impact from a series of belt tightening measures that are aimed at reducing risk. This has raised concerns amongst industry experts who believe that this will now help to fuel the current economic downturn. Additionally, credit card companies are now beginning to withdraw the popular O% transfer deal.
It appears that consumers are now finding that it is extremely difficult to obtain credit to support their everyday activities. However, this lack of available credit will have a detrimental impact on various areas of the economy. For instance, this highly volatile situation could lead to a steep rise in unemployment as industries find that their customer base is greatly reduced.
Retail analysts believe that if there is a substantial decline in consumer spending then talk of a UK recession will be hard to disprove.
A wide range of charities and agencies have reported record increases in the level of personal debt that is being accumulated by the UK’s population.