Since Mintel published the 2008 edition of this report, the credit market has changed beyond recognition. The days of cheap, easily available credit are well and truly over, at least for the foreseeable future. Falling base rates haven’t stopped credit card companies pushing up their APRs, while cheap mortgage deals are only available to those with a sizeable deposit.

It’s not just the supply of credit that has tailed off. Consumers are showing real signs of reassessing their financial priorities, cutting back on spending and looking to pay down debts. The savings ratio is still low by historical standards – but is far higher than was true at the peak of the debt boom.

This report examines the key economic trends that drive both demand and supply for credit, and the way in which consumers are reacting to the current slowdown. It tracks changes in attitude and confidence as the credit crunch turned into full-blown recession, and looks at which consumer groups have been hardest hit.

More general attitudes towards money and spending are examined, highlighting who is saving for a rainy day and how basic money management skills can affect the feeling of financial wellbeing. The consumer groups most likely to be cutting back on spending in favour of building up their savings are identified – crucial information not only for financial services providers, but also for any business reliant on discretionary consumer expenditure.

Key issues

The economy is in recession, with all the associated pressures this places on consumer spending and, in turn, borrowing.

Arrears are rising rapidly as people struggle to make ends meet – but most are still managing their finances fairly well.

The increase in consumer credit has perhaps been overplayed by the media, but outstanding debts are still at a record high.

There are signs that consumers are starting to recognise the advantages of the traditional adage “Never a borrower nor a lender be”.

Excessive debt is concentrated among a relatively small proportion of the adult population – for most, borrowing remains fairly manageable.

There is an extremely close link between an inability to budget and a tendency to get into financial difficulties.