Falling credit demand is due to lack of consumer confidence in the economy, the Finance & Leasing Association (FLA) has warned.

The latest consumer credit figures from the FLA indicated that consumers used 8% less credit in the 12 months to June 2010 than in the previous 12 months.

Despite this, FLA members lent £12.5 billion to consumers in the second quarter of the year.

Fiona Hoyle, FLA head of consumer finance, said: “This month’s figures suggest that consumers are uncertain about the economy. It may be that they are waiting to see the impact of public sector expenditure cuts on disposable income before making any long-term repayment commitments on credit.