Credit figures bring cheer for high street

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The Independent Online
BUOYANT money supply and consumer borrowing figures yesterday suggested that the recovery in high-street spending remains slow but intact.

Consumers took on pounds 225m more new debt than they paid off in August, the highest monthly figure for two years, according to the Central Statistical Office. Borrowing has been on an erratic upward trend since the middle of last year.

Net borrowing from finance houses rose by pounds 109m to pounds 298m in August, the highest for nearly four and a half years. But this was partly offset by the repayment of pounds 89m of debt on bank credit cards, which followed pounds 9m of net borrowing in the previous month.

Some pounds 30.4bn of consumer debt was outstanding at the end of the month, up by pounds 161m on the month after bad debts were written off. The amount of new credit issued in the month rose by pounds 220m to pounds 4.68bn in August, but was down slightly on June.

The revival in consumer spending was emphasised by official figures showing a further rise in the growth of the narrow money supply measure M0 - cash plus banks' balances with the Bank of England. M0 rose by an unexpectedly robust 5.4 per cent in the year to September, above the 4 per cent ceiling of the Treasury's monitoring range. But holdings of cash have been boosted because of low interest rates on savings accounts.

'The September M0 figures are consistent with a continued recovery in retail sales over the next few months', Robert Lind, economist at UBS, said. The Treasury said the figures were consistent with 'recovery and low inflation'.

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