CONSUMER borrowing hit a 17-month low in December 2016, in what is being described as “considerable relief” for the Bank of England.
The Bank’s latest statistics show that net unsecured lending slowed to £1bn in December 2016, the weakest level since May 2015.
This follows an increase of £1.9bn the previous month, which had been the highest level since March 2005.
Meanwhile, net bank lending to non-financial businesses fell by £2.1bn in December after a drop of £577m in November and net lending to small- and medium-sized enterprises fell by £302m in December, after a small increase of £83m in November.
The figures come amid expectations of an unsecured credit boom in the first quarter of this year, according to the Bank’s Credit Conditions survey. Consumers have been more inclined to borrow money due to historically low interest rates, slow wage growth and impending rises in inflation.
“December’s slowdown in unsecured consumer credit growth will likely be of considerable relief to the Bank of England, which has clearly been becoming more fretful about consumer borrowing,” said Howard Archer, chief UK and European economist for research firm IHS Global Insight.
“However, it remains to be seen if December is the start of a slowing trend.
“Consumers appear to have been generally keen to take advantage of low interest rates to borrow.”
He added that the second successive drop in bank lending to businesses in December fuels concern that businesses will become increasingly cautious in their behaviour due to uncertainty over Brexit.
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