Tax concerns deter borrowers

NET consumer borrowing rose slightly in February, but was sufficiently subdued to suggest that looming tax increases were deterring high- street spending, according to figures from the Central Statistical Office yesterday.

Further doubt was cast on the strength of recovery by figures showing the largest quarterly rise in business failures for three years. Trade Indemnity, the credit insurance group, reported that 1,036 firms went to the wall in the first three months of the year, 11 per cent up on the fourth quarter of 1993.

The rise followed a worsening in overdue payments late last year, according to Trade Indemnity's William Simpson. 'Even with this rise, the trend in business failures is still one of decrease . . . but failure rates could remain high,' he said.

Consumers borrowed a net pounds 277m in February, slightly higher that the City had expected, but well below the average for the previous six months. The increase was more than accounted for by a pounds 283m net rise in borrowing from finance houses, boosted by rising car sales.

The amount of new credit advanced by finance houses, on bank credit cards and by building societies (excluding mortgages) rose to a record pounds 5bn from pounds 4.7bn in January.

The figures had little impact on the markets, where both shares and gilts saw prices rise in thin trading. The FT-SE index of 100 leading London shares ended 28.6 points higher at 3,149.4.