Consumer borrowing set to fall as Bank of England warning to leaders sinks in

The Bank of England’s warnings about excessive consumer borrowing appear to be getting through to lenders according to the central bank’s latest credit conditions survey.

The survey shows that the net balance of lenders’ expectations for the availability of unsecured lending over the next three months has fallen to minus 28.6 per cent, down from 16.2 per cent previously, the lowest since the 2008 recession.

Consumer credit grew at an annual rate of 9.8 per cent in August, according to the Bank, reflecting booming car loans and credit card borrowing.

The growth rate is down since late 2016, but it is still close to the rate last seen before the 2008 financial crisis.

The Bank’s Financial Policy Committee warned last month that UK lenders are underestimating their potential losses on credit card and other unsecured loans to customers, and said it was compelling them to hold an extra £10bn of capital to protect their balance sheets in the event of an economic shock.

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