(Reuters) – Britain’s consumer lending grew in November at the slowest pace since mid-2022, with lenders approving fewer mortgages than expected, according to Bank of England data released on Friday, consistent with other signs of a slowing economy.
The annual growth rate of consumer credit cooled to 6.6% in November from 7.3%, the slowest pace of growth since June 2022, BoE data showed.
Britain’s economy stagnated in the three months to September, and the BoE last month estimated it would continue to contract in the fourth quarter – a disappointment for the new Labor government, which promised to boost growth when it announced its budget on October 30.
“The data on money and borrowing in November show that household caution in borrowing and saving ahead of the budget has not disappeared,” said Elias Hilmer, an economist at the consulting firm Capital Economics.
“This adds further downside risk to our forecast that GDP will stagnate in the fourth quarter,” he added.
Chancellor of the Exchequer Rachel Reeves announced big rises in company taxes and a boost in government borrowing to help fund more public spending and investment – but business polls took a turn for the worse after the Budget.
Some economists believe higher public spending will temporarily boost Britain’s economy in 2025, although the outlook is clouded by the possibility of global trade frictions fueled by the policies of US President-elect Donald Trump and a worsening eurozone economy.
So far, the housing market has been largely unaffected by the slowdown, with individual lenders such as Nationwide Building Society (LON:) continues to report rising house prices.
However, the BoE data offered an early indication of the weaker housing market that many analysts expect in 2025.
The BoE said mortgage approvals fell to 65,720 in November from 68,129 in October, the lowest since August.
A Reuters poll of economists pointed to approvals of about 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 below the consensus of a 1.2 billion pound gain in a Reuters poll.
($1 = £0.8064)
