UK consumers borrowed at the fastest pace in more than 11 years in November – a sign that households continued their spending spree in the wake of last year’s Brexit vote.
Net consumer credit was £1.9 billion, the most since March 2005, according to recently published Bank of England data. Credit surged almost 11% year on year, also the most in more than a decade.
The economy has been unexpectedly resilient following the June referendum to leave the European Union, with growth driven mainly by consumption. Retail-sales growth accelerated through 2016 and the Confederation of British Industry said that it grew at the fastest pace in more than a year in December.
The better-than-forecast performance prompted the BOE to change its stance at the end of last year to neutral, from a previous bias towards easing. Governor Mark Carney says that the next move in rates could be up, as well as down.
Policymakers nevertheless expect growth to cool this year, as inflation fuelled by the pound’s decline curbs consumer spending. British clothing retailer Next Plc recently forecast another tough year after a disappointing Christmas, deepening concern that rising expenses and a Brexit-induced squeeze will pinch the industry in 2017.
The BOE data also showed that there were about 67,500 mortgage approvals in November, little changed from the previous month. Net mortgage lending amounted to £3.2 billion.
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