British customers increased their borrowing at the slowest rate since 2014 in August, official statistics showed today, in a sign that Brexit uncertainty is weighing on consumer confidence.
The annual growth rate of lending to British consumers continued to slow in August, falling to 5.4 per cent, the Bank of England said. This is considerably lower than its peak of 10.9 per cent in November 2016, and is the lowest level in over five years.
Britons also borrowed less to buy houses, with net mortgage borrowing by households weakening to £3.9bn in August. Yet as this followed a strong net flow of £4.5bn in July, the figures were in line with the post-2016 average.
Mortgage approvals for house purchases – an indicator of future lending – weakened to 65,500 in August, in contrast to the 18-month high of 67,000 in July.
Consumer spending has kept the UK economy on its feet in 2019, as investment and trade have suffered under Brexit uncertainty. Yet there are growing signs that politics is taking its toll on sentiment.
Josie Dent, senior economist at research institute Cebr, said: “Today’s figures highlight the impact that the political situation is having on households.”
“With uncertainty likely to continue right up until the Brexit deadline, consumers will continue to hold off on taking out loans in the coming months.”
Kevin Roberts, director of the Legal & General Mortgage Club, said: “Wider political uncertainty is undoubtedly on the minds of consumers, but the mortgage market remains strong.”
“Housing schemes like Help to Buy and innovation from lenders, such as family support mortgages are giving younger borrowers in particular more options to join the property ladder.”
Howard Archer, chief economic adviser to the EY Item Club, said the fall may not be a big problem. “Significantly improved real earnings growth since mid-2018 and recent record high employment will hopefully dilute the need for consumers to borrow,” he said.
(Image credit: Getty)