Sherry and mince pies leave people £52m deeper in debt

BRITISH consumers embarked on a festive spending splurge in December, running up credit card debts and using their overdrafts.

Overall borrowing outstripped the amount being paid back for the first time since June, according to the Bank of England. Credit card use was the main force driving unsecured consumer leverage up by £52m over Christmas as shoppers splashed out on turkey with all the trimmings.

Net lending to individuals rose by £1.2bn in the last month of the year, double the average for the previous six months. Although mortgages made up the bulk of the figure, lenders granted 1,022 fewer home loans in December than in November, suggesting the housing market paused for breath.

Economists said the mild rise in personal debt was the result of seasonal cheer, as families shook off the atmosphere of austerity for a few weeks.

Andrew Goodwin of the Ernst and Young Item club added: “The small increase in consumer credit is likely to be connected to consumers bringing forward purchases to avoid the VAT increase and a relapse is likely next month.”