LONDON, Sept 29 (Reuters) – Unsecured lending to British households rose at the fastest annual pace since at least 1993 in August, Bank of England data showed on Tuesday, in a sign that household demand remains solid ahead of potential tax rises in October’s budget.
Net unsecured lending to consumers rose by £2.464 billion ($3.26 billion) on the month, well above economists’ forecast of a £1.9 billion increase and the biggest rise since monthly records started in 1993. The series is not adjusted for inflation.
“The rise in borrowing comes alongside a two-year high in consumer confidence, driven by a better outlook for personal finances and economic conditions,” said Katie Clinton, head of financial services advisory at KPMG UK.
“However, with persistently high inflation squeezing disposable incomes, stronger borrowing may also reflect continued affordability challenges pushing people to credit to get by.”
Market researcher GfK’s long-running consumer confidence survey strengthened to a two-year high this month, and official figures showed shoppers unexpectedly increased their spending last month.
Finance minister John Healey will present his first annual budget on October 28 and many economists think he will have to find tens of billions of pounds in tax rises to keep the government’s deficit reduction goals on track.
Tuesday’s BoE data also showed British lenders approved 54,918 mortgages for house purchase last month, the fewest since December 2023, and below the 56,100 median forecast in a Reuters poll of economists.
Lenders had approved 55,928 mortgages in July.
Investors think the central bank is likely to raise interest rates in November for the first time since the outbreak of the Iran war and another move is priced in for February.
($1 = 0.7555 pounds)
(Reporting by Suban Abdulla; editing by Andy Bruce)
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