UK consumer borrowing growth slows sharply

Consumer borrowing growth slowed sharply in July as Britons tightened their belts and lenders became more cautious. The annual pace of credit growth dropped to 8.5 per cent, the lowest level since November 2015, according to Bank of England data[1] published on Thursday. Banks lent GBP0.8bn in July, down from GBP1.5bn in June because of a drop in the volume of credit card lending and other loans, including car finance.

While the BoE warned that the data were volatile, it is the second time this year that borrowing dropped sharply in a single month: in March monthly consumer credit[2] growth dropped to its lowest level since November 2012, although it subsequently rebounded. Consumer borrowing has slowed this year as a boom in car finance that began in 2015 has lost steam. Car sales propelled the annual rate of growth to its peak of 10.9 per cent in November 2016.

Lenders have previously told the BoE that demand for both borrowing and the availability of loans has fallen this year.

“July’s data reinforces the impression that consumers are currently relatively cautious in their borrowing while lenders have certainly become warier about advancing unsecured credit,” said Howard Archer, chief economic adviser to the EY ITEM Club. He said that the Bank of England would likely welcome the slowdown in consumer credit growth as it was concerned about “pockets of risk” but would not want to see unsecured lending dry up. Members of the BoE’s Monetary Policy Committee unanimously voted to raise interest rates for the second time since the financial crisis at the start of August because of concerns that spending growth combined with a shortage of available workers would lead to rising inflation.

Thursday’s data also showed that monthly mortgage lending volumes fell in July. Households borrowed GBP3.2bn secured against property, the lowest level since April 2015. The number of mortgage approvals for house purchase fell to 65,000, from 65,600 in June, in line with market expectations.

Hansen Lu, property economist at Capital Economics, said there were “few reasons to expect a meaningful pick-up in lending” this year as new buyer inquiries were low and “further interest rates hikes are on the way”. Meanwhile small businesses repaid GBP437m more than they owed during July. Large businesses borrowed a net total of GBP3.1bn.

Lending to small businesses has either been stagnant or shrunk for the past four consecutive months.


  1. ^ Bank of England data (
  2. ^ consumer credit (

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