Consumer credit is growing for the first time since the financial crash, lagging a recovery in spending that has been under way since 2012, according to the Central Bank of Ireland.
Having crashed by 49% in the seven years to last January, the demand for car loans, credit cards and other forms of unsecured credit finally recovered over the summer. “Over the past four months there has been a return to growth in consumer credit, particularly with a medium-term maturity,” said Central Bank statisticians Stephen Byrne and Ciaran Meehan.
“The typical profile of lending in this category includes consumer durables such as cars, furniture and large electrical goods.”
The number of cars licensed in the first eight months of 2016 amounted to 129,733, a rise of 19.5% compared with last year.
A separate analysis of spending on credit cards, which accounts for about a fifth of consumer credit, found that hotel breaks were the fastest-growing area of expenditure, up 5% on last year.
The figures were reported in the Central Bank’s quarterly bulletin, issued last week, which also compared changes in household wealth in Ireland with those of 11 other European countries since the financial crisis.
It found that households in Britain, Sweden and Ireland were hit hardest by the stock market crash from 2007 and 2009, largely because more of their wealth was in pensions and investment funds than in other countries.
While the Swedes and British recovered their losses in the subsequent rally, Irish pensions and investments are still worth less than at the peak of the market in 2007. “Households in countries most affected by the financial turmoil, as well as those who held much of their assets either directly or indirectly in equities, saw the biggest changes,” according to the Central Bank.