Consumer boom takes credit card spending to pounds 4bn

Britons have been reacquainting themselves with their flexible friends. Thanks to the gathering consumer boom, spending on plastic is growing at a record pace, with much of the increase being splurged on entertainment and hotels.

Credit card spending was pounds 4.1bn last month, up nearly a quarter compared with a year earlier, and debit card spending reached pounds 3.3bn, a 44 per cent rise, according to statistics from the Credit Card Research Group, a trade body for the country's main card issuers. Separate figures published by the high street banks yesterday showed that personal loans, including credit card borrowing, were nearly two-thirds higher last month than a year earlier, at pounds 409m compared with pounds 250m last September.

There is every sign, too, that the spending spree is in its infancy. Household purchasing power adjusted for taxes and inflation is growing at its fastest pace for four years. By next March the flavour of the late 1980s might well have returned, when high earners in the City of London receive their bonuses after a bumper year in 1996.

According to the CCRG, one of the biggest rises in both credit and debit in the year to September was spending on entertainment, which includes restaurants, cinemas, theatres, amusement parks and bowling alleys. Use of credit was up 31 per cent at pounds 314m during the month, and debit spending climbed 60 per cent to pounds 117m.

Other figures showed strong mortgage lending and a surge in broad money growth last month.

If key figures next week, including GDP for the third quarter of the year, are equally strong, the Bank of England will have an impressive arsenal of evidence in favour of higher interest rates. But analysts still expect the Chancellor, who yesterday held his pre-Budget away-day at country house Dorneywood with ministers and officials, to try to leave rates unchanged before the election.

New mortgage lending by the high street banks and building societies was 17 per cent higher than a year earlier in September, at pounds 1.5bn, although both reported a dip during the month. The banks lost market share to the building societies, accounting for only pounds 417m of the total.

Net advances made by the building societies were a remarkable 81 per cent higher than the previous September. A further signal of the new buoyancy of the housing market was an increase in the number of loans approved to 52,000, nearly a third higher than the same month last year.

"This should ensure that house prices continue to rise over the winter months," said Jonathan Loynes, an economist at HSBC Markets.

The banks' figures showed that the corporate sector repaid loans in September. This was reflected in a weaker-than-expected economy-wide total for lending, only pounds 3.5bn compared with expectations of a pounds 5bn-plus increase.

Some economists took this as a sign that the recovery was patchy. But Michael Saunders at investment bank Salomons said the drop in corporate borrowing was probably due to the tailing off of takeover activity and the fact that manufacturers were borrowing less to finance excess stocks now these had been run down.

"All of these figures are reasonably buoyant," he said. This buoyancy was mirrored by a 0.8 per cent jump in M4, the broad money measure, taking its 12-month growth rate to 9.8 per cent from 9.5 per cent in August.

The FTSE 100 index closed at a record 4,053.1 yesterday, up 11 points.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
film
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
News
peopleWarning - contains a lot of swearing
Travel
travel
Arts and Entertainment
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project