Lending growth slows as consumers remain cautious ahead of Brexit
Consumer lending growth dropped to its slowest rate in more than three years in November, according to new data from the Bank of England (BoE).
The annual growth rate for consumer credit slowed to 7.1 per cent in November, reflecting weaker flows of new lending, the BoE said.
The growth rate was the slowest since March 2015 and well below the peak of 10.9 per cent in November 2016.
The report said growth in credit card lending has been stable, but the annual growth rate of other loans and advances was just 6.6 per cent, the lowest level since June 2014.
The figures reinforce the idea consumers have been cautious with their spending in the run-up to Brexit.
The BoE said the amount consumers have borrowed each month to buy goods and services slowed in the second half of 2018.
Consumer caution was also named as a key factor in the weak growth of the service sector in December, according to the IHS Markit/CIPS services purchasing managers’ index (PMI) released today.
Howard Archer, chief economic advisor to the EY Item Club, said: “These figures reinforce the impression that consumers are currently relatively cautious in their borrowing while lenders have certainly become warier about advancing unsecured credit.
“This is welcome news for the Bank of England given its view that recent rapid growth in consumer credit has created a ‘pocket of risk’.”