Unsecured consumer credit gets Christmas bonus
Unsecured consumer credit rose £52 million during December, powered by festive credit card borrowing, according to the Bank of England.
For four consecutive months between August – November, consumer repayments surpassed new unsecured consumer credit, but the trend was reversed in December as borrowing on credit card rose by £195 million.
In December, total net lending to individuals rose by £1.2 billion, double the average of the previous six months, with the vast majority of lending in the form of mortgages. The number of mortgages approved for house purchases dipped slightly compared with November, to 59,023, but this was still higher than the average of the past six months.
"The small increase in consumer credit is likely to be connected to consumers bringing forward purchases to avoid the VAT increase and a relapse is likely next month," said Andrew Goodwin, of Ernst and Young. "The household sector is continuing to de-leverage and we expect consumers to provide little support to the recovery as it develops this year."
The Bottom Line:If Mr Cable has his way...
"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more