UK’s consumer lending expands at the slowest rate in over 5 years in November

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Updated on Mar 11, 2020
Reading time 3 minutes
  • Bank of England posts consumer lending at 5.7% in November, the smallest increase since June 2014.
  • Most of the economic indicators have turned red for the United Kingdom.
  • IHS Markit/CIPS reveal a further drop in the construction industry in December.
  • Pantheon Macroeconomics consultancy says UK's GDP growth may catch momentum in 2020.
  • Bank of England's data suggests rising stability in the UK's housing market.

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As per the economic data on Friday, consumer borrowing in the United Kingdom expanded in November but at the slowest rate since 2014. The drop in the construction industry, on the other hand, extended further in December that hinted at the hampered economy of the UK amidst the Brexit complications.

The Bank of England announced yesterday that in the 12 months that ended in November, unsecured consumer lending was capped at 5.7%, posting the smallest increment since June 2014. The bank also stated that November’s data marked the first time in over 6 years that borrowing remained shy of credit card repayments in the UK.

Most Of The Economic Indicators Have Turned Red For The UK

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While the household spending has supported the country’s economy amidst the Brexit driven slowdown, most of the other economic indicators have turned red with investors and analysts focused on PM Johnson’s moves following his victory in the general election on December 12th.

IHS Markit/CIPS data also highlighted that the civil engineering activity saw the steepest decline in December in over a decade. Consequently, the drop in the construction industry extended further in December. According to EY ITEM Club Consultancy’s economist, Howard Archer, the government will have to boost its investment in infrastructure and that too in a relatively short period of time in order for the construction companies to turn optimistic in the upcoming months.

While the rising Middle Eastern complications have recently been fueling the global economic slowdown further as the Brexit events continue to weigh locally on the UK’s economy, Samuel Tombs of Pantheon Macroeconomics consultancy said that a chunk of Bank of England’s data suggests economic prosperity for the UK in 2020.

Citing households’ money supply, the economist stated that monetary indicators suggested in November that 2020’s first half will likely see an improving momentum for UK’s GDP growth.

BoE’s Data Suggests Rising Stability In The UK’s Housing Market

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The BoE’s data also suggested that the UK’s housing market is slowly starting to find stability, despite falling through most of the last year. November recorded the approved mortgages for house purchases in the UK at 64,994. In October, the figure was capped at 64,662. Analysts had expected the figure to dropped to 64,450 in November.

The growth in house pricing has recently dropped by 1 to 2 percent in the UK. The drop, however, is primarily confined to London and a few of its neighboring areas. According to Nationwide, December recorded an annual growth of over 1% in house prices that marked the first time in over 12 months. Brexit uncertainty, however, the lender added, can be expected to continue being the deciding factor for markets in 2020.

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