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a spur to greater levels of spending and - by implication - borrowing over and above that which would apply during periods of low inflation. During times of high and rising prices, consumers see little point in holding on to the cash that they have when they know it is steadily losing its value over time. Why delay the purchase of something when, the longer they wait, the more expensive it will be? Inflationary periods in the past have all featured this spending incentive, par- ticularly when the cost of borrowing has appeared comparatively low when set against high inflation. This increased spending and borrow- ing sky-rockets as consumers realise that saving money to purchase a product outright may not make sense. Why wait, given that the product is likely to be that much more expensive and their savings worth that much less? This is particularly the case when con- sumers can access low rates of inter- est. At the present time there is a lot of finance available on rates of interest substantially lower than the inflation rate. We do not know how long this dispari- ty will remain in place, but, so long as it does, there will be a powerful impetus to borrow and spend now rather than later, particularly for short term needs. At LendingMetrics, we believe that the rising level of UK inflation is more than likely to spur a UK borrowing surge in the run-up to Spring. We have the drivers in place: a high inflation rate, plus a plentiful availability of lower interest rate loans. "There will be a powerful impetus to borrow and spend now rather than later, particularly for short term needs"

Canny borrowers can currently avail themselves of finance that appears amazingly good value when set against inflation’s 5.4% (December’s Consumer Price Index) or nearly 8% depending on which measure you sub- scribe to. Buy Now Pay Later borrow- ing - already a £2.7 billion sector - can expect to go from strength to strength over the coming months, as can other lenders with competitive products. This buy-and-borrow-now phenom- enon will take place against a back- drop of large volumes of deferred purchasing. Consumers are only now fully shaking off the restraints that Covid has placed on them and their spending levels. There is an awful lot of consumption that has been suppressed over the past 18 months and it is now coming to the surface. Already we can see this beginning to happen in our data. The volume of transactions that passed through our company’s Auto Decision Platform (ADP) jumped 56% during January 2022, as compared to 2021. This came on top of a 35% rise across our products during the fourth quarter of 2021 and an 18.9% rise in the third quarter. We see every reason for this trend to continue through the remainder of the first quarter of 2022 and into the Spring. With Q1/22 being 42% higher than Q1/21, our prediction is that April-June (Q2) spending may be up some 25% compared to last year. That will take it above the pre-Covid second quarter of 2019. Lenders that have the right product at the right price, and, importantly, the back-office capability to flex with dra- matically increasing volumes, are well placed to do very well over the coming months. They should prepare for a record 2022.

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