Consumer and business borrowing accelerate, BoE figures show
Consumers and businesses borrowed at a faster rate in February, suggesting a firming of confidence in the economy after a shaky few months.
Bank of England figures showed consumer credit rose by £1.6bn, up from £1.3bn in January and more than the £1.5bn six-month average.
Net lending to non-financial companies showed a sharp jump, rising by £1.7bn after virtually flatlining in January. February’s figure was more than three times the six-month average of £500m. The annual rate of growth picked up to 3.2% from 3%.
The BoE’s figures appeared to herald a more upbeat mood after a period of political and economic uncertainty during the winter. An easing of the squeeze on real incomes, solid employment levels and less gloom surrounding Brexit talks boosted sentiment in GfK’s monthly survey.
The government has relied largely on consumers’ willingness to borrow and spend to keep the economy moving as incomes were squeezed by rising prices. The BoE has said household borrowing is manageable but it is considering imposing bigger capital buffers on banks to rein in lending, including to consumers.
Paul Hollingsworth, senior UK economist at Capital Economics, said the BoE's figures suggested households remained comfortable using debt to supplement their incomes.
“With the real pay squeeze having come to an end, and sustained rises in real wages on the horizon, the outlook for spending growth remains bright,” he said.