THE AMOUNT borrowed by UK businesses fell by 1.8 per cent over the 12 months to June amid “ongoing economic uncertainty”, according to new research.
This was an improvement from a 2.6 per cent decline in the 12 months to May, boosted by a 9.2 per cent increase in lending to manufacturers, according to banking trade body UK Finance which compiled the data.
“Monthly net lending to businesses returned to positive levels in June, driven by continued growth in borrowing in the manufacturing sector,” said Stephen Pegge, managing director, commercial finance at UK Finance.
“However, the broader picture remains mixed, with ongoing economic uncertainty impacting on firms’ appetite to borrow and invest in the long term.”
Overall, the UK economy is growing at its slowest pace in more than five years, marked by weaker manufacturing and construction growth.
Consumer-facing industries have also lagged, as average high inflation and weak pay growth weigh on people’s purchasing power.
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Household finance data from UK Finance showed that gross mortgage lending in the 12 months to June came in at £23.5bn, equating to 2.1 per cent annual growth.
This was driven by the volume of remortgages, which increased by 4.3 per cent, while house purchase approvals dropped by 4.7 per cent.
“June was yet another strong month for gross mortgage lending,” said John Goodall, chief executive of peer-to-peer property lender Landbay.
“Any signs of a summer slowdown were offset by a sudden rush to lock into the attractive deals on the market, with a rate rise on the cards for the coming months if not weeks.
“While overall lending grew, we cannot ignore subdued activity among home movers. Rising house prices and substantial stamp duty costs have stumbled the market and sales remain significantly low.”
The overall consumer credit market grew by 4.1 per cent in the 12 months to June, up from 3.9 per cent in May, UK Finance data showed.
Credit card spending was 4.7 per cent higher than a year earlier, with outstanding levels of card borrowing having grown by 5.6 per cent over the year.
“Lending to households has continued to grow modestly in line with recent trends, with increased borrowing on credit cards mirrored by a fall in overdraft borrowing,” said Eric Leenders, managing director, personal finance at UK Finance.
“Card spending saw relatively strong growth year on year, with retail sales buoyed by the sunshine and recent sporting events.”