In archetypal John Bull mode, British consumers are ignoring the recession lurking around the corner. Figures released Friday by the Bank of England show that in July Mr and Ms Bull borrowed via mortgages, credit cards and other loans to the tune of £6.1 billion – an alltime record.
Their profligacy hikes the UK’s total consumer debt to £699bn – over £5,300 per household before mortgages are taken into account.
In addition, July also saw mortgage lending maintain its growth, implying that soaring house prices are set to continue. The Bank revealed that £14.9bn of mortgage loans were approved last month, £900m up on June's total.
Some onlookers believe this figure is sustainable. “What really matters is affordability,” says BBC business editor Jeff Randall. “For most people a downturn is rising unemployment, but as we saw last month the [jobless] figures are continuing to fall ... and with interest rates still relatively low and house prices higher consumers still have the feelgood factor and they feel confident to borrow.”
Inflation? One economist at least thinks this massive indebtedness will not lead to inflationary problems. “Reports of a renewed price war amongst supermarkets and a drop in the level of pay deals suggests that the pressure on inflation over the coming months will be in a downward direction,” opines Simon Rubinsohn, chief economist at London investment management firm Gerrard.
News source: BBC Online Business News (UK)