Ministers warned not to restrict credit too tightly

Consumer borrowing fell by 6 per cent in 2010, according to the Finance & Leasing Association.

In December – traditionally a month when more customers use credit – the FLA actually saw a fall in credit sales. Credit card spending was down by 5 per cent, store cards and store instalment credit fell by more than a quarter each.

The figures reflect a difficult month on the high street with poorer than expected Christmas sales, doubtless due in part to the icy weather. One exception, according to the FLA, was the buoyant consumer car lending market. Without this boost, consumer credit overall would have fallen by 10 per cent during 2010.

Fiona Hoyle, the FLA's head of consumer finance, said: "These figures confirm that there is no such thing as 'easy credit'. Stricter lending requirements mean that some consumers are finding it harder to access credit. Low consumer confidence is also a major factor in this fall in lending.

"Against this background of reduced lending and declining consumer confidence, the Government needs to be careful not to regulate some kinds of credit out of the market. For example, current proposals to restrict the store card sector could have serious repercussions for a high street recovery," Ms Hoyle added.