Prime Highlights:
- UK credit card borrowing hits fastest annual growth in nearly two years, reflecting festive spending pressures.
- Households borrowed an additional £2.1 billion in consumer credit in November, up from £1.7 billion in October.
Key Facts:
- Annual growth in credit card borrowing rose to 12.1% in November, the highest since January 2024.
- Bank and building society deposits increased by £8.1 billion in November, indicating cautious financial planning.
Background:
Credit card borrowing in the UK rose at its fastest annual rate in almost two years in November, as households turned to credit to manage rising festive costs, according to the Bank of England.
The central bank reported that individuals borrowed an additional £2.1 billion in consumer credit during the month, up from £1.7 billion in October. Credit card borrowing accounted for £1 billion of the total, an increase from £700 million a month earlier. Other forms of consumer credit, including personal loans and car dealership finance, grew by £100 million to £1.1 billion. Annual growth in credit card borrowing rose from 10.9% in October to 12.1% in November, the highest level since January 2024.
Experts said the figures likely reflect the pressure households face from the rising cost of living, as well as the pre-Christmas shopping period. Simon Trevethick of StepChange, a debt charity, noted that “for many households, the increase in consumer credit borrowing in November may reflect the reality that everyday costs are becoming harder to manage without turning to credit.” He added that the rise may also indicate people borrowing to prepare for festive spending, with 14 million people reportedly struggling to afford Christmas.
While annual inflation has eased to 3.2%, it remains above the Bank of England’s 2% target. Retail price inflation also picked up slightly in December, driven by a rise in food costs to 3.3%, while non-food prices fell amid heavy discounting. Helen Dickinson, chief executive of the British Retail Consortium, said promotions on items such as toys, books, and home entertainment helped households enjoy the festive season.
Despite the increase in borrowing, UK households also boosted their bank and building society deposits by £8.1 billion in November, up from £6.7 billion in October, indicating cautious financial planning ahead of the autumn budget. Mortgage approvals for house purchases fell by 500 to 64,500, reflecting a temporary slowdown in the property market.
Economists suggested that while speculation over tax changes did not significantly affect borrowing in November, the modest rise in deposits indicates that households remain cautious about future spending.
