Borrowing and investing by businesses slows, as households draw on Isa accounts at fastest rate on record

 
Lucy White
BRITAIN-FRANCE-AVIATION-TRAVEL
Companies' deposits remained strong (Source: Getty)

Businesses are continuing to put expansion and investment on hold, according new statistics, as non-financial companies' bank deposits have continued to grow at a fast pace.

Figures from banking trade body UK Finance showed companies' deposits were growing at an annual rate of 5.8 per cent, although this was down from 8.2 per cent in August.

Net repayment of borrowing by non-financial companies however was 0.7 per cent, below the recent average.

Read more: Brexit negotiations uncertainty leads to fall in UK business confidence in investment prospects

“Businesses have continued the trend of bolstering their cash reserves amidst a cautious business landscape due to Brexit uncertainties,” said UK Finance's senior economist Mohammad Jamei.

UK Finance's report noted the latest CBI Business Optimism survey, which found confidence had fallen to its lowest level for over a year, and the Credit Conditions Survey, which indicated demand for credit from smaller and medium-sized businesses dropped in the third quarter.

Read more: Weak economic outlook holding back business investment says Institute of Directors

Net capital market issuance, such as stocks and bonds, in the first 10 months of 2017 was £7.3bn – well below the £17bn issued in the same period of 2016.

Meanwhile, households seem to have been saving less and borrowing more. Consumer deposits grew at a slower rate in October, while individuals withdrew more money from their tax-efficient savings accounts (Isa) than any other month on record.

UK Finance detected a £1.5bn net outflow from cash Isas held at the high street banks last month.

The total amount of consumer credit outstanding grew at a slower pace compared with the previous month, at 7.1 per cent, while credit card borrowing remained strong.

Read more: British banks threatened by rise in consumer credit the Bank of England warns

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