Consumer credit shows rise despite high street gloom
Saturday 19 August 1995
Two years ago, consumers were repaying debt, even though consumer spending was picking up nicely. But since the end of 1994, consumers have been consistently ready to borrow, even though the rate of growth in consumer spending has tailed off.
Indeed in the first quarter of 1995, consumer credit grew by over pounds 500m at a time when spending fell back from the previous quarter, the first such decline since the end of the recession. The increase in borrowing has built up even more since then, despite weak sales on the high street.
The most likely explanation is that as consumers flinch from entering or trading up in the housing market, they are becoming more prepared to enter into smaller-scale borrowing. With credit card advances rising by over pounds 100m in July, the summer sales may also have contributed to the jump in personal credit.
There is a similar uncertainty to the increase in borrowing by industrial and commercial companies, which were also repaying debt until recently. In July, British banks lent them over pounds 500m.
This may be a less positive development than it seems. At least part of the increase appears to be financing an unplanned build-up of inventories, with wholesalers and retailers increasing their borrowing by pounds 160m.
Provisional estimates from the Bank of England showed a jump in bank and building society lending in July of pounds 6.9bn, double what the market had been expecting. However, distortions including Lloyds Bank's purchase of the Cheltenham & Gloucester Building Society meant that the market in effect discounted the increase and its effect on raising M4 growth to 8 per cent rather than the 7 per cent forecast.
- 4 #JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
- 5 Women think Irish men are the sexiest, survey finds
Italian police 'reveal' what Jesus looked like as a young boy
Mysterious 'X-Files' sounds heard miles above the Earth
Florida couple forced to register as sex offenders for having sex on public beach
Who should I vote for in the general election? Take The Independent's interactive quiz to find out which party is the right choice for you
General election: Conservatives mocked online over Boris Johnson's claim of SNP 'jockalypse'
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
General Election 2015: Sturgeon claims Scots 'appalled' by Ed Miliband's refusal to work with SNP
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...