But other figures, from the credit insurer Trade Indemnity, showed business collapses accelerated late last year and that 30 per cent of British companies are working at half capacity. It reported that companies still faced depressed demand for products and that the number of cancelled orders had risen steadily through last year.
Business failures normally remain high well after the economy begins to recover, so the stock market was happy to concentrate on forward- looking indicators. The FT-SE index of 100 top London shares rose 35.2 points to a record 2,957.3. The market was also boosted by higher New York share prices - the Dow Industrial Average later closed up 64.84 at a record 3,469.42 - and hopes that an early cut in German interest rates would encourage the Government to follow suit. Upbeat weekend surveys of business and consumer confidence also helped.
The unexpectedly sharp rise in new debt that consumers were willing to take on in January encouraged cautious City optimism about prospects for high street spending. Consumers took out pounds 151m more new debt than they paid off during the month, according to the Central Statistical Office - the largest increase since July 1991.
The rise in net consumer debt was dominated by hire purchase borrowing from finance houses. City analysts said that reflected the boost to sales of cars after the abolition of car tax in the Autumn Statement. Consumers also borrowed pounds 40m more than they paid off on bank credit cards, the first month in which net credit card debt has increased since July.
At the end of January consumers owed a total of pounds 29.7bn to finance houses, on bank credit cards and in non-mortgage borrowing from building societies. That was pounds 75m higher than in December. Some pounds 76m was written off as debt which lenders have given up hope of having repaid.
Kevin Gardiner, economist at Warburg Securities, said the rise in consumer credit was 'relatively small beer, but reasonably encouraging', reflecting higher consumer confidence.
Seven wise squabblers, page 23
Market report, page 25Reuse content