New debt in May is year's lowest

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The Independent Online
CONSUMERS repaid a net pounds 19m of borrowings during May and took on less new debt than in any other month this year, the Central Statistical Office said yesterday. The figures underline consumers' reluctance to kick-start economic recovery by spending more in the shops.

Share prices slipped as the Bank of England signalled that there was no imminent prospect of a cut in interest rates to help revive the economy. The FT-SE index of 100 leading company shares closed 28.1 points lower at 2,469.

Consumers have been net repayers of debt in nine of the past 10 months, although May's repayment was smaller than City forecasts and down from figures of pounds 56m in April and pounds 71m in March. Just under pounds 30bn of consumer debt was outstanding at the end of the month, adjusting for normal seasonal changes.

As in recent months, a rise in borrowing on bank credit cards was more than offset by repayment of debt to finance houses. In the three months to May consumers repaid a net pounds 146m of debt while credit card debt grew by pounds 248m. In the previous three months consumers repaid a net pounds 246m while pounds 75m was added to credit card debt.

Consumers took on pounds 3.77bn of new debt in May compared with pounds 4.1bn in April. The figure for the three months to May was pounds 11.8bn, slightly lower than in the previous three months.

Meanwhile, revisions to consumer credit figures for 1991 led the CSO to revise its shorter leading indicator, the composite index intended to predict turning points in the economy about four months in advance. The indicator now suggests that the economy hit bottom in May, whereas previously it had pointed to a trough in September last year.

The coincident indicator, which aims to identify turning points as they happen, suggests a trough in February, while the longer leading indicator suggests that the recession ended in April last year.