Bank of England figures point to extended squeeze on spending

 

The prospect that Britain can borrow its way back to growth dimmed yesterday with official new data showing that consumer credit was flat last month, as the money supply notched up a record monthly decline.

Unsecured consumer credit was effectively unchanged in October from the month before, and up 2.1 per cent on the year before, as nervous customers refrained from taking on new debt, in a move that suggests the slump on the high street is set to continue, according to the Bank of England.

Furthermore, the M4 measure of money supply tumbled 0.3 per cent in October from September, and by 2.7 per cent on the year before – the biggest annual fall since records began in 1983, according to the Bank of England. The M4 money supply measure includes notes and coins in circulation, bank deposits and bonds, and there is a close correlation between the measure and gross domestic product.

The disappointing consumer credit and money supply figures came as the Bank of England revealed better-than-expected figures for mortgage approvals, which rose from a revised 51,193 in September to 52,743 in October.

Economists had forecast that approvals would come in at 51,800, and analysts welcomed the rise, although it failed to provide them with confidence for the longer term.

Howard Archer, the chief UK economist at IHS Global Insight, said: "A pick-up in mortgage approvals in October and firmer house prices in November is unlikely to herald a significant, sustainable upturn in the housing market's fortunes given largely unfavourable economic fundamentals."

Separate data from Nationwide appeared to suggest an improvement in consumer confidence, with the average UK house price rising by 0.4 per cent to £165,798 in November from October. This translates to a 1.6 per cent rise, year on year.

The Nationwide's house price figures contrast with those from Hometrack on Monday, which reported a 0.2 per cent decline in house prices in November compared with October, while this week's Land Registry figures also confirmed prices fell in October.

Economists doubted the Nationwide data heralded a return to significant house price growth.

Robert Gardner, the chief economist at Nationwide, said: "House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook. But with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next 12 months."

The prospects for British growth have been significantly downgraded this week, as low borrowing and weak spending, by individuals and businesses, help drag the economy down.

On Monday the OECD said Britain stood on the threshold of a "double-dip" recession, and yesterday the Office for Budget Responsibility slashed its GDP growth forecast for this year to 0.9 per cent, from the 1.7 per cent it was forecasting in March.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
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: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum