UK consumer credit growth slows in December, according to Bank of England

Consumer credit was up 9.1 per cent on the same month a year earlier, down from a peak of 10.9 per cent in November 2016

The annual rate of credit card borrowing ticked up to 8.8 per cent in the month, but was still down from its 9.7 per cent peak in April (Getty)

The rate of UK consumer borrowing continued to slow in November, something that will please the Bank of England as it seeks to cool the personal loan market.

Consumer credit was up 9.1 per cent on the same month a year earlier, down from a peak rate of 10.9 per cent in November 2016 and the slowest expansion since December 2015, the Bank reported.

The Bank had previously voiced concerns about the rise in personal indebtedness, particularly the sharp increase in credit card borrowing.

The annual rate of credit card borrowing ticked up to 8.8 per cent in the month, but was still down from its 9.7 per cent peak in April.

The saving ratio of the UK household sector – the difference between aggregate income and spending – fell to 5.2 per cent in the third quarter of 2017, the second lowest level in 20 years, strengthening fears over the extent to which personal borrowing is driving GDP growth.

“The Bank of England will be pleased with the further slowdown in consumer credit in November and will be looking for a continuation of this trend,” said Howard Archer of the EY Item Club.

“It does appear that lenders have been reining in the amount of unsecured credit available to consumers and tightening their lending standards... However, the persistent squeeze on consumer purchasing power is likely continuing to fuel the need for some consumers to borrow.”

Approvals for house purchase rose to 65,139 in the month, up from October, but below the six month average rate of 66,562, the Bank also reported.