UK consumer borrowing continues to rise in October

Jasper Jolly
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Credit Crisis To Impact Consumer Spending
UK consumers are still borrowing at a steadily increasing rate (Source: Getty)

Lending to UK households grew in October, as British consumers continued to borrow money in spite of the vote to leave the European Union.

Consumer credit grew by an annual rate of 10.5 per cent in October, marginally faster than the 10.4 per cent rate reported for September.

This translates to an increase of £1.6bn in October, bringing total amounts owed by consumers to £190.1bn.

The figures measure the amount lent to households in loans and credit cards, but exclude mortgage lending, which also recorded growth in October.

Read more: UK mortgage approvals shrug off Brexit uncertainty in October

Credit card borrowing grew by £0.6bn in the month, to a total of £66.2bn, while the growth rate of credit card borrowing over the last year has now hit nine per cent.

This was slightly higher than the September figures, which showed that Britons had increased credit card borrowing by £0.5bn, which translated to a growth rate of 8.4 per cent.

The results indicate that British consumers are borrowing at a relatively healthy growth rate, although the effects of the devaluation of the pound may affect it if, as expected, inflation rises and consumer prices rise.

Howard Archer, chief UK and European economist for IHS Markit said: "It looks inevitable that the fundamentals for consumers will progressively weaken over the coming months with inflation rising markedly due to the weakened pound and companies likely increasingly looking to hold down pay to limit their total costs."

"Indeed, it looks probable that inflation will move above earnings growth during 2017. Furthermore, the labour market also looks likely to come under mounting pressure despite its recent resilience." he added.

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