Britons have saddled themselves with a record level of debt, the Bank of England revealed yesterday.
The disclosure came after other signs of a spending boom prompted warnings of an interest rate rise.
Total personal borrowing rose by £6.8bn in November, the largest monthly cash increase since the Bank started keeping records in 1993.
Mortgage lending grew by £5.8bn, an annual increase of 10 per cent and the first double-digit rise on record. Credit card and hire purchase spending also grew at a solid pace. Consumers are now carrying more than £723bn of outstanding debt, or some £12,200 for every man, woman and child.
The figures came a day after the Nationwide building society said house prices were rising at their fastest rate since 1988, and as retailers reported their best Christmas since 1987.
The echoes of the boom and crash of the late 1980s prompted Sir Edward George, the Bank's Governor, to warn on Thursday that he might have to increase rates. Michael Hume, the UK economist at Lehman Brothers, gave a 5 per cent chance of a rise next week.
But Jonathan Loynes, the chief UK economist at Capital Economics, said yesterday's figures showed the domestic economy was holding up in the face of a global slowdown. "The Bank needs to stand ready to lower rates again if there are any signs of consumer spending ... slowing while the global background remains so weak."Reuse content