By Wiktor Szary and Jason Douglas
LONDON--Britons' unsecured borrowing hit a near 12-year high in November, data showed Wednesday, raising concerns over the sustainability of the U.K.'s economic growth, which to a large extent relies on continued consumer spending.
U.K. consumer credit grew by 1.9 billion pounds ($2.3 billion) in November, the Bank of England's data showed, the largest increase since March 2005, driven mostly by non-credit card debt. This was above the expectations of analysts polled by The Wall Street Journal, who predicted a GBP1.6 billion increase, and noticeably above the six-month average.
The pick up in consumer credit, which includes personal loans, bank overdrafts, car loans and store credit, may suggest that the recent growth in consumer spending is driven by debt, fuelling doubts over the health of the U.K. economy as the country heads for Brexit negotiations.
The BOE in August cut its benchmark interest rate to a new low as part of a multipronged stimulus program designed to cushion the economy from any potential Brexit shock. One of the central bank's goals is to ensure credit is available to households and businesses that want to borrow.
The BOE also said there were 67,505 new home loans approved by lenders in November, up slightly from 67,371 in October, and significantly above the six-month average of 64,178. Approvals weakened in the immediate aftermath of the June 23 vote to leave the European Union, hitting a near two-year low in August, prompting concerns about the health of the housing market, but the numbers subsequently recovered.
Including mortgages, total household borrowing rose by GBP5.1 billion in November, net of repayments, up by GBP0.2 billion on the previous month, while nonfinancial businesses paid back a net GBP0.8 billion.
Also Wednesday, BOE data showed U.K. government debt continued to attract foreign buyers despite the uncertainty surrounding Brexit. Foreigners appeared undeterred, buying a net GBP15.6 billion of U.K. government bonds in November, compared with purchases of GBP10.5 billion a month earlier.
Write to Wiktor Szary at Wiktor.Szary@wsj.com and Jason Douglas at Jason.Douglas@wsj.com
(END) Dow Jones Newswires
January 04, 2017 05:07 ET (10:07 GMT)
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