The number of mortgage approvals in August sank to its lowest in 21 months in the wake of the Brexit vote, and net lending to small businesses contracted for the first time since late 2015, statistics from the Bank of England today showed.
However, consumer borrowing continue to expand strongly, emphasising the ambiguity of the signals from the economy in the wake of the referendum vote.
Mortgage approvals slipped to 60,058 in August, the lowest since November 2014, which analysts said pointed to a slowdown in the housing market.
Net lending to small firms fell by £300m, breaking a run of seven months of growth.
Net bank lending to large firms was just £300m, which was seen by some analysts as a sign of an unwillingness to invest by firms in the wake of the Brexit vote.
But consumer credit – including credit cards and other unsecured loans – rose by £1.6bn, taking the annual growth rate back up to 10.3 per cent, the joint highest since October 2005.
Lowest since November 2014...
There was a £400m increase in credit card borrowing and £1.2bn in other loans.
The latest consumer confidence index reading from the European Commission’s regular survey released today suggests that trend is likely to continue.
The index rose to -1.7 in September, up from -7.5 in August, taking it almost back up to pre-referendum levels
But strongest since 2005...
“Consumers were clearly prepared to continue borrowing and spending in August, and it is notable that confidence has recovered markedly after slumping in July in the immediate aftermath of the Brexit vote,” said Howard Archer of IHS Global Insight.
But Andrew Wishart of Capital Economics said the housing market looked vulnerable.
“While confidence is stabilising, it is unlikely to stage a sharp recovery as buyers will remain cautious until the post Brexit landscape becomes clearer,” he said.
What experts have said about Brexit
What experts have said about Brexit
1/11 Chancellor of the Exchequer Philip Hammond
The Chancellor claims London can still be a world financial hub despite Brexit “One of Britain’s great strengths is the ability to offer and aggregate all of the services the global financial services industry needs” “This has not changed as a result of the EU referendum and I will do everything I can to ensure the City of London retains its position as the world’s leading international financial centre.”
2/11 Yanis Varoufakis
Greece's former finance minister compared the UK relations with the EU bloc with a well-known song by the Eagles: “You can check out any time you like, as the Hotel California song says, but you can't really leave. The proof is Theresa May has not even dared to trigger Article 50. It's like Harrison Ford going into Indiana Jones' castle and the path behind him fragmenting. You can get in, but getting out is not at all clear”
3/11 Michael O’Leary
Ryanair boss says UK will be ‘screwed’ by EU in Brexit trade deals: “I have no faith in the politicians in London going on about how ‘the world will want to trade with us’. The world will want to screw you – that's what happens in trade talks,” he said. “They have no interest in giving the UK a deal on trade”
4/11 Tim Martin
JD Wetherspoon's chairman has said claims that the UK would see serious economic consequences from a Brexit vote were "lurid" and wrong: “We were told it would be Armageddon from the OECD, from the IMF, David Cameron, the chancellor and President Obama who were predicting locusts in the fields and tidal waves in the North Sea"
5/11 Mark Carney
Governor of Bank of England is 'serene' about Bank of England's Brexit stance: “I am absolutely serene about the … judgments made both by the MPC and the FPC”
6/11 Christine Lagarde
IMF chief urges quick Brexit to reduce economic uncertainty: “We want to see clarity sooner rather than later because we think that a lack of clarity feeds uncertainty, which itself undermines investment appetites and decision making”
7/11 Inga Beale
Lloyd’s chief executive says Brexit is a major issue: "Clearly the UK's referendum on its EU membership is a major issue for us to deal with and we are now focusing our attention on having in place the plans that will ensure Lloyd's continues trading across Europe”
8/11 Colm Kelleher
President of US bank Morgan Stanley says City of London ‘will suffer’ as result of the EU referendum: “I do believe, and I said prior to the referendum, that the City of London will suffer as result of Brexit. The issue is how much”
9/11 Richard Branson
Virgin founder believes we've lost a THIRD of our value because of Brexit and cancelled a deal worth 3,000 jobs: We're not any worse than anybody else, but I suspect we've lost a third of our value which is dreadful for people in the workplace.' He continued: "We were about to do a very big deal, we cancelled that deal, that would have involved 3,000 jobs, and that’s happening all over the country"
10/11 Barack Obama
US President believes Britain was wrong to vote to leave the EU: "It is absolutely true that I believed pre-Brexit vote and continue to believe post-Brexit vote that the world benefited enormously from the United Kingdom's participation in the EU. We are fully supportive of a process that is as little disruptive as possible so that people around the world can continue to benefit from economic growth"
11/11 Kristin Forbes
American economist and an external member of the Monetary Policy Committee of the Bank of England argues that the economy had been “less stormy than many expected” following the shock referendum result: “For now…the economy is experiencing some chop, but no tsunami. The adverse winds could quickly pick up – and merit a stronger policy response. But recently they have shifted to a more favourable direction”
Some analysts had pointed to a £66bn surge in the money supply (the aggregate sums held in easy access banks accounts by businesses and households) between May and July in the wake of the referendum as a sign of an imminent jump in spending that would boost GDP growth.
But the money supply rose just £2.9bn in August, taking the three-month annualised growth rate sharply down from 14.7 per cent in July to 10.9 per cent in August.
A sustained surge in the money supply might have helped to put the Bank of England off from cutting interest rate rates again next month.Reuse content