Study: Consumer borrowing declines in January

The British economy has stagnated a bit in recent months, despite several initiatives by the government and Bank of England.

In a column for The Telgraph, Gerard Lyons, chief economic adviser to London Mayor Boris Johnson, suggested that more spending and increased lending are two of the biggest keys to recovery. However, a recent study by the British Bankers Association (BBA) revealed that year-over-year consumer borrowing dipped in January.

"January's severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses," said BBA statistics director David Dooks in a statement, adding, "Low consumer and business confidence generates a natural tendency to restrain borrowing appetite."

According to the report, consumer credit card spending in the United Kingdom decreased £100 million in January. New loans and overdraft borrowing totaled just £1.1 billion, a £200 million year-over-year reduction.

In addition to spending and increased loans, Lyons advocated the need for change to spur economic growth. However, government initiatives such as the Funding for Lending Scheme have been largely unsuccessful so far. 

Alternative credit and short term lending methods might offer potential solutions. Many alternative lenders use Payment Reporting Builds Credit methods to decide who is eligible to receive loans, which has enabled many of the U.K.'s underserved and unbanked residents to secure funds.