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.

Life and Style
Swimsuit, £245, by Agent Provocateur

Diving in at the deep end is no excuse for shirking the style stakes

Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Yaya Touré has defended his posturing over his future at Manchester City
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Detail of the dress made entirely of loom bands
Life and Style
There were mass celebrations across Argentina as the country's national team reached their first World Cup final for 24 years
transfersOne of the men to suffer cardiac arrest was 16 years old
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
ebookA unique anthology of reporting and analysis of a crucial period of history
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Network Engineer (CCNA, CCNP, Linux, OSPF, BGP, Multicast, WAN)

£40000 per annum: Harrington Starr: Network Engineer (CCNA, CCNP, Linux, OSPF,...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice