Consumer credit has been an area of focus for the Bank of England, describing it as a ‘pocket of risk’ in a statement from the Financial Policy Committee. The strength of consumer credit has contributed to increasing calls for an interest rate rise.

Figures from the Finance & Leasing Association (FLA) show that new business volumes in the point of sale (POS) consumer new car finance market fell by 8% in August, compared with the same month in 2016, while the value of new business was up by 2% over the same period.

New car sales are often taken as a bellwether for the UK economy. Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The August figures reported by the POS consumer new car finance market are in line with wider trends in private new car sales. These trends are not unexpected given the strength of the market in recent years and subdued consumer confidence about the general economic outlook.”

In contrast, credit card and personal loan new business together grew by 4% compared with August 2016, while retail store and online credit new business increased by 7%. Second charge mortgage new business increased 25% by value and 11% by volume over the same period.

Kilkelly added: “The modest growth in consumer finance new business overall in August reflects subdued consumer confidence about the general economic outlook. New business grew by 6% in the first eight months of this year, which is in line with single-digit growth expectations for UK new consumer credit in 2017 as a whole.”