The Bank of England (BoE) data revealed that consumer lending via credit cards, loans and overdrafts rose at an annualised rate of 8.3 per cent in the three months to November, a pace last seen in October 2005.
Meanwhile, mortgage approvals dropped less than expected to 59,029 in November from 59,511 in October, the lowest level since June 2013, when the housing market was starting to pick up.
With a general election due in May, the lending figures suggest that consumers will continue to power Britain’s economic recovery into 2015. The Westminster government has been keen to rebalance the economy towards manufacturing and export trade, but so far has had limited success.
The BoE findings chime with official national accounts data released last month, which showed household spending rising at its fastest pace since the second quarter of 2010 in the three months to September, as well as private-sector surveys showing strong appetite for big purchases.
ING economist James Knightley said: “This morning’s UK data releases show that the long hoped-for economic rebalancing story is not playing out as envisaged.
“With employment and real household disposable income set to rise robustly in 2015, consumer spending looks set to become the UK’s main growth engine once again.”
Howard Archer, chief UK and European economist at forecasting consultancy IHS Global Insight, said the surge in consumers snapping up items on “Black Friday” at the end of November “likely contributed to the high borrowing levels”.
He said: “Relatively high consumer confidence means that people have become more prepared to borrow in recent months.
“It also may well be that a significant amount of people have recently been borrowing more due to the squeeze on their purchasing power coming from extended low earnings growth.
“Hopefully, higher employment, extended very low inflation and now rising earnings growth will ease the pressure on many households’ financial positions over the coming months and reduce their need to borrow.”
On a monthly basis, consumer credit increased by £1.3 billion in November, which is higher than the average monthly increase of £1bn seen over the previous six months and the largest upswing seen since a £1.4bn increase in February 2008.
Within that total, credit card lending increased by £269 million in November, which is above the typical £200m monthly uplift seen in recent months. Personal loan and overdraft borrowing jumped by £983m, against the recent average monthly increase of £700m.
The BoE said net lending to businesses dropped by £149m in November, the smallest decline since August, and lending to small businesses, in particular, rose by £286m, the biggest increase since May 2011.
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