INSIGHT
A bumper Xmas?
Christmas spending could be set to return to something like pre-Covid levels, according to data analysed by LendingMetrics
The volume of transactions that pass through the financial technology com- pany’s ADP, OBV and LMX platforms have steadily increased month-on- month since the relaxing of restrictions in July. Third quarter volumes were up 18.9% on the same period in 2020, and this came on top of a 55.4% jump during the second quarter compared to the same three months a year earlier. This upward trajectory, says Lending- Metrics, suggests lenders will experi- ence demand significantly higher than 2020 levels. Consumer borrowing may even peak at - or even exceed - the level reached during the Christmas period of 2019. Managing Director of LendingMetrics, Neil Williams, said: ‘The data suggests lenders may be in line for a significant
uplift in demand as we move towards the end of the year. Additionally, feed- back from core clients confirms that the vast majority have plans for increased transactions during Q4 and into the first quarter of the New Year. Whether spending beats 2019 levels is going to be the key question.’ "Whether spending beats 2019 levels is going to be the key question." LendingMetrics’ MD points to a number of factors buoying spending. Along- side the relaxation of pandemic restric- tions and increased travel, the average consumer is starting to see a notable increase in disposable income due to the prominent topic of wage inflation which will likely outstrip retail inflation.
However, any re-introduction of restric- tions will likely derail the bounce-back. Mr Williams added: ‘Whilst the mood and wider industry are optimistic, prag- matically we have to remember that the picture remains uncertain. Mainstream media is warning of a possible return to some restrictions during the coming winter, despite there being no confirmed government plans for this.’ LendingMetrics saw a 7.2% drop in loan volumes in Q4 2020 compared to the previous quarter that was triggered by the start of last winter’s lockdown, so it’s not unlikely that the same dip may occur again this year. Regardless, a national mood of growing employment stability and record levels of job vacan- cies will almost certainly lead to a wider use of credit to achieve consumer aims.
06 | Metrics Monthly
Q3 | 2021
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