(Reuters) -British consumer lending grew at the weakest pace since mid-2022 in November and lenders approved fewer mortgages than expected, according to Bank of England data released on Friday which chimes with other indications of a slowing economy.
The annual growth rate of consumer credit cooled in November to 6.6% from 7.3%, its slowest pace of expansion since June 2022, the BoE data showed.
Britain’s economy stagnated in the three months to September and the BoE estimated last month that it was continuing to flatline in the fourth quarter – a disappointment for the new Labour government which promised to boost growth when it published its Oct. 30 budget.
“November’s money and lending data suggests that households’ caution with their borrowing and saving ahead of the Budget hasn’t gone away,” said Elias Hilmer, economist from consultancy Capital Economics.
“This adds further downside risk to our forecast for GDP to stagnate in Q4,” he added.
Finance minister Rachel Reeves announced big tax increases on businesses and a rise in government borrowing to help fund more public spending and investment – but business surveys have deteriorated since the budget.
Some economists think higher public spending will temporarily boost Britain’s economy in 2025, although the outlook is clouded by the possibility of global trade frictions spurred by the policies of U.S. President-elect Donald Trump, and a worsening euro zone economy.
So far the housing market has been mostly unaffected by the slowdown, with individual lenders like Nationwide Building Society (LON:) continuing to report increases in house prices.
However, the BoE data offered an early hint of a weaker housing market that many analysts expect to see in 2025.
The BoE said mortgage approvals fell to 65,720 in November from 68,129 in October, the lowest reading since August.
A Reuters poll of economists had pointed to approvals of around 68,500.
In cash terms, consumer credit rose by a net 878 million pounds ($1.09 billion) in November from 995 million pounds in October – the smallest increase since June and short of the Reuters poll consensus for a 1.2 billion pound rise.
($1 = 0.8064 pounds)
