UK Consumer Lending Surges at Fastest Pace Since 1993

UK consumer lending experienced its fastest annual growth since at least 1993 in August, according to data from the Bank of England. Net unsecured lending to consumers rose by £2.464 billion ($3.26 billion) on the month, exceeding economists' forecasts of a £1.9 billion increase.

The rise in borrowing coincides with a two-year high in consumer confidence, driven by improved personal finances and economic conditions. However, persistently high inflation is squeezing disposable incomes, forcing people to rely on credit to make ends meet, said Katie Clinton, head of financial services advisory at KPMG UK.

The Bank of England data also showed British lenders approved 54,918 mortgages for house purchase last month, the fewest since December 2023. Finance minister John Healey is set to present his first annual budget on October 28, with many economists predicting tax rises to keep the government's deficit reduction goals on track.