Consumer lending in the UK experienced its weakest growth since mid-2022 in November, while mortgage approvals fell below expectations, according to Bank of England (BoE) data released
on Friday. These figures reinforce signs of a slowing economy.
The BoE reported that the annual growth rate of consumer credit eased to 6.6% in November, down from 7.3% in October, marking the slowest rate of increase since June 2022.
The UK economy showed no growth in the three months to September, and the BoE recently forecast that this stagnation likely continued through the fourth quarter. This represents a setback for the new Labour government, which had aimed to spur economic growth with its October 30 budget.
“November’s money and lending figures indicate that households remain cautious about borrowing and saving, even after the budget,” said Elias Hilmer, an economist at Capital Economics. “This raises further downside risks for our forecast of GDP stagnation in Q4.”
Finance Minister Rachel Reeves introduced significant tax hikes on businesses and increased government borrowing to support higher public spending and investment. However, subsequent business surveys have pointed to weakening sentiment since the budget announcement.
Some analysts predict that increased public spending could temporarily lift the economy in 2025. Nevertheless, concerns persist over global trade tensions stemming from the policy direction of incoming U.S. President Donald Trump and a potentially worsening eurozone economy.
Despite the economic headwinds, the UK housing market has so far shown resilience, with lenders like Nationwide Building Society continuing to report rising house prices. However, the latest BoE data signals early signs of a potential slowdown in the housing market, which many analysts expect to materialize in 2025.
Mortgage approvals dropped to 65,720 in November from 68,129 in October, the lowest level since August and significantly below the 68,500 approvals forecasted in a Reuters poll of economists.
Meanwhile, the net increase in consumer credit was £878 million ($1.09 billion) in November, down from £995 million in October. This represents the smallest monthly rise since June and fell short of the £1.2 billion increase predicted by economists in the Reuters survey.