U.K. consumer credit slowed as storms hit spending

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U.K. consumers scaled back their unsecured borrowing in February as the country battled flooding and the start of the coronavirus outbreak.

Loans to households rose just 877 million pounds ($1.09 billion) from January, when they increased 1.1 billion pounds, the Bank of England said in a report Monday. At the same time, mortgage approvals jumped to 73,546, the most since 2014, amid a resurgence in the housing market following Boris Johnson’s election victory in December.

The figures will almost certainly worsen in March, when the pandemic created a steep dropoff in demand as businesses close and workers are told to stay home. The housing market is also frozen, with some lenders withdrawing mortgage offers and moves being delayed.

The weakness of consumer credit coincided with a poor month for retail sales, as storms brought flooding and transport disruption to large parts of the country.

Borrowing was driven almost entirely by unsecured debt such as personal loans. Credit-card borrowing and repayments were virtually in balance. The annual rate of consumer-credit growth slowed to 5.7%, the lowest since 2014 and down from rates above 10% in 2017.

Bloomberg News
Coronavirus U.K. Credit