(Reuters) – British consumer lending grew at the weakest pace since mid-2022 in November and lenders agreed to mortgage less money than expected, according to Bank of England data released on Friday that echoed other signs 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, BoE data showed.
Britain's economy stagnated in the three months to September and the BoE predicted last month that it had continued to flatline in the fourth quarter – a disappointment to the new Labor government which promised to boost growth when it published the Oct. budget.
“November's money and borrowing data show that the caution of households about borrowing and saving money before the Budget did not go away,” said Elias Hilmer, an economist at Capital Economics.
“This adds downside risk to our GDP forecast for Q4,” he added.
Finance minister Rachel Reeves has announced a big tax hike for businesses and an increase in government borrowing to help fund more public spending and investment – but business surveys have slumped since the budget.
Some economists think higher public spending will boost Britain's economy temporarily in 2025, although the outlook is clouded by global trade tensions fueled by US President-elect Donald Trump's policies, and the eurozone's recession.
So far the housing market has not been affected by the slowdown, with other lenders alike National Building Society (LON:) continued to report rising housing prices.
However, the BoE data provided a preview of the weak 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 pointed to a gain of about 68,500.
In monetary terms, consumer credit rose by 878 billion pounds ($1.09 billion) in November from 995 billion pounds in October – the smallest increase since June and short of the Reuters poll consensus of a rise of 1.2 billion.
($1 = 0.8064 pounds)