November’s fall in consumer credit marks the fifth net repayment in as many months, including the record £600m of debt that was paid down in October.
Credit card lending in November increased by a muted £200m, though other loans and advances also showed a decline of £600m, a sixth successive monthly net repayment.
The figures come after the Bank of England’s Monetary Policy Committee warned in the minutes of its December meeting that the extent of the increase in the household savings ratio would be one of the key factors projecting uncertainty over the outlook for inflation and activity growth.
Consumers continue to adjust their household balance sheets in the shadow of worries over the state of the economy, the job market and restrictions on bank borrowing. The household savings ratio reached an 11-year high in the third quarter of 2009, rising to 8.6 per cent.
The Bank also cautioned that the nascent stabilisation in consumer spending in the third quarter of 2009 was a uncertain indicator of economic recovery due to the effects of the car scrappage scheme and households bringing forward spending to avoid the reversal of the cut in the VAT rate at the beginning of this year.
“Those effects were hard to quantify, making the extent of the underlying recovery in consumer spending, and therefore future prospects, difficult to judge,” the minutes of the December MPC meeting stated.