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.
- 1 Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
- 2 Novel Scarlett Johansson tried to ban, Grégoire Delacourt’s The First Thing You See, to be published in UK
- 3 A pint of water every day is the key to losing weight, scientists say
- 4 Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
- 5 Carol Vorderman reveals she is 'covered in burns' after she fell off her treadmill while running naked
Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
Nazi gold train: 'Significant' discovery made in Poland
Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
Carol Vorderman reveals she is 'covered in burns' after she fell off her treadmill while running naked
TTIP controversy: The European Commission and Big Tobacco accused of cover-up after heavily redacted documents released
Dresden riots: Protesters in Germany attack refugee buses shouting 'foreigners out'
France train shooting: US soldiers speak of the moment they stopped gunman and 'beat him until he was unconscious'
Labour leadership: Jeremy Corbyn accused of 'deluding' young supporters with 'claptrap'
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith calls for urgent ESA overhaul as part of drive to cut down welfare costs
iJobs Money & Business
£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...
£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...
£25000 per annum + benefits: Ashdown Group: A large financial services company...
£20400 per annum: Ashdown Group: An established and highly reputable organisat...