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UK consumers pick up pace of borrowing for first time since mid-2018 - BoE

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By Reuters
UK consumers pick up pace of borrowing for first time since mid-2018 - BoE
FILE PHOTO: A pedestrian shelters under a Union Flag umbrella in front of the Bank of England, in London, Britain August 16, 2018. REUTERS/ Hannah McKay   -   Copyright  Hannah Mckay(Reuters)

LONDON (Reuters) – British consumers, whose spending has helped drive the economy since the Brexit referendum shock of 2016, picked up the pace of their borrowing for the first time in 16 months in October, data showed on Friday.

The growth rate in unsecured consumer lending increased to 6.1% in the 12 months to October from 5.9% in September, the first increase in the annual growth rate since June 2018, the figures from the Bank of England showed.

Consumers have slowed the pace of their spending since voters decided to leave the European Union more than three years ago but the loss of momentum has contrasted with cuts to investment by business, helping the overall economy.

There have been signs recently that households were turning more cautious as the prospect of a potentially chaotic Brexit grew, and after Prime Minister Boris Johnson called an early election for Dec. 12.

Earlier on Friday, a measure of consumer confidence remained at its lowest level in six years.

The BoE said consumer lending increased by 1.326 billion pounds in October, compared with a median forecast for a rise of 0.9 billion pounds in a Reuters poll of economists.

There were other signs of caution among households in the data.

The number of mortgages approved for house purchase dropped to 64,602 in October, the lowest number since March and at the bottom end of a range of forecasts in the Reuters poll.

An industry survey published earlier this week showed banks in Britain approved the fewest mortgages in October since March.

The BoE’s data on Friday showed net mortgage lending rose by 4.321 billion pounds, the highest since July and above all forecasts in the Reuters poll.

The BoE also said net gilt holdings by foreign investors fell by 5.243 billion pounds in October, the biggest drop since February.

(Reporting by William Schomberg and David Milliken)