Consumers in the UK are becoming increasingly debt-averse as inflation rises
Bank of England data released on Friday revealed that despite rising prices, British consumers raised their borrowing less than predicted in May.
Lending to consumers climbed by 844 million pounds ($1.02 billion) in net terms, a lot less than the 1.3 billion-pounds gain which was the median prediction in a Reuters survey of experts and down from 1.377 billion pounds rise in April.
Nicholas Farr, a senior economist at Capital Economics, has predicted that borrowing will be low for the remainder of the year as a result of rising interest rates and the strain on families’ real income from increased inflation.
On Wednesday, Governor of the Bank of England Andrew Bailey said it was “very clear” that the British economy was entering a period of slowdown.
There has been an increase in the rate of inflation above 9%, and projections show that it will rise to above 11% in October when electricity rates are expected to increase once more. Forecasters like the IMF and OECD predict Britain will be hurt worse by rising costs than other countries.
A poll published by S&P Global on Friday indicated claims of rising expenses were more frequent among British firms than anywhere else in Europe.
Consumer confidence also last month plummeted to a historic low, according to the long-running GfK poll.
The BoE statistics also revealed lenders boosted their mortgage lending in May by the greatest since September last year,
Net mortgage lending climbed by 7.426 billion pounds but new mortgage approvals kept broadly unchanged at 66,163, the BoE reported.
The Reuters poll of experts had indicated to a net gain of 4.15 billion pounds in mortgage lending in May and 64,000 mortgage approvals throughout the month.