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Consumer finance growth slows

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Consumer finance grew 6% in 2017, but growth was slowing towards the end of the year.

Figures from the Finance & Leasing Association (FLA) showed new business in December 2017 increased by 1% compared with the same month in 2016.

Retail store and online credit new business increased by 9% over the year. Second charge mortgages, new business increased 14% by value and 10% by volume over the same period. However, this too was slowing towards the end of the year, growing by just 1% in December.

The weakening of growth will be welcome by the Bank of England, which had been worried about the level of consumer borrowing. It was a key factor in its decision to raise interest rates in November last year.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “Growth in retail store and online credit new business in the final quarter of 2017 was consistent with the seasonal pick-up in retail sales.

“The overall performance of the consumer finance market in 2017 was in line with expectations. We expect the market to continue to report modest single-digit growth in 2018 as a whole.”

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