British Consumer Lending Growth Weakens

(Reuters) – British consumer lending grew at the weakest pace since mid-2022 in November, with lenders approving fewer mortgages than expected, according to Bank of England (BoE) data released on Friday. This data aligns with other indications of a slowing economy.

The annual growth rate of consumer credit cooled in November to 6.6% from 7.3%, marking its slowest expansion since June 2022. The BoE indicated that Britain’s economy stagnated in the three months to September and is continuing to flatline in the fourth quarter. This is a disappointment for the new Labour government, which promised to boost growth following 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, an economist from Capital Economics. He added that this adds further downside risk to GDP stagnation in Q4.

Finance Minister Rachel Reeves announced significant tax increases on businesses and a rise in government borrowing to fund public spending and investment, but business surveys have deteriorated since the budget announcement.

Some economists believe that higher public spending will provide a temporary boost to Britain’s economy in 2025, although uncertainties persist due to potential global trade frictions from U.S. policies and a declining eurozone economy.

So far, the housing market has largely remained unaffected by the slowdown, with lenders like Nationwide Building Society reporting house price increases. However, BoE data hints at a expected weakening in the housing market by 2025.

In November, mortgage approvals fell to 65,720, down from 68,129 in October, which is the lowest since August. A Reuters poll had projected approvals of around 68,500.

In cash terms, consumer credit rose by a net £878 million ($1.09 billion) in November, down from £995 million in October—the smallest increase since June and below the consensus estimate of £1.2 billion rise.

> Note: ($1 = 0.8064 pounds)