Money and Credit - December 2018

These monthly statistics on borrowing and deposits by households and businesses are used by the Bank’s policy committees to understand economic trends and developments in the banking system. 
Published on 30 January 2019

Key points

  • Annual consumer credit growth slowed to 6.6% in December, reflecting the continuation of relatively weak flows of new lending. The net monthly flow in December fell to £0.7 billion, reflecting less extra borrowing on credit cards.
  • UK businesses increased their borrowing through bank lending and commercial paper in December. But they made large net redemptions of bonds in for the second month in a row, contrasting with strong issuance earlier in the year.
  • Households significantly increased their deposits in interest-bearing instant access savings accounts in December, contributing to an increase in households’ money holdings.

References in the text point to the summary tables below. For further statistics, please see our interactive charts and Bankstats tables.

Lending to individuals (Tables A-E)

Consumer credit (Tables B and C):

The extra amount borrowed by consumers to buy goods and services fell to £0.7 billion in December (Chart 1). Within this, credit card borrowing was particularly weak at only £0.1 billion, compared to an average of £0.3 billion since July. The overall consumer credit monthly flow was slightly below the £0.9 billion monthly average since July, and significantly below the average between January 2016 and June 2018 of £1.5 billion. A comparison with December 2017, using non-seasonally adjusted data, shows that the recent decline in net consumer credit reflects an increase in repayments more than offsetting higher gross borrowing by households.

Chart 1: Net consumer credit flows

Seasonally adjusted

Chart 1: Net consumer credit flows
The annual growth rate of consumer credit has been slowing gradually since its peak of 10.9% in November 2016, falling further to 6.6% in December. Within this, the growth rate of credit card lending, which had until recently been fairly stable, fell to 7.1%. The growth rate on other loans and advances, which has been declining since December 2016, fell further to 6.4%.

Mortgage lending (Tables D and E):

Mortgage market activity has been broadly stable since 2016, and this trend has continued. Households borrowed £4.1 billion secured against property in December, slightly above the average of the previous six-months. Mortgage approvals for house purchase (an indicator of future lending) were around 63,800 in December, unchanged from November, but slightly below their 2018 average of around 65,200.

Lending to businesses (Tables F-I)

The amount businesses’ borrowed from UK banks and financial markets (in the form of bonds, equity and commercial paper) increased by £2.5 billion in December (Chart 2). Borrowing from banks remained robust in December at £2.3 billion. Commercial paper issuance was strong at £3.0 billion, the strongest since July 2003. These were offset by large net redemptions of bonds reflecting weak issuance of new debt for the second month in a row. This latest data means that net bond issuance in 2018 as a whole was weak relatively to its pre-crisis average and recent years (Chart 3).

Chart 2: Net finance raised by PNFCs1

Seasonally adjusted

Chart 2: Net finance raised by PNFCs

Chart 3: Cumulative net corporate bond issuance

Not seasonally adjusted
Chart 3: Cumulative net corporate bond issuance
This month, seasonally adjusted statistics for some series on bank lending to businesses by business size has been published for the first time. Previously there had been insufficient data to allow the seasonal factors to be estimated. Using this data, the annual growth rate of lending to large businesses was 4.0% and to small and medium sized enterprises was 0.1% in December. These data are now available on Summary table G and Bankstats table A8.1.

Broad money (Table J)

The total amount of money held by the UK private sector (broad money or M4ex) increased by £11.5 billion in December. Within this, money held by households increased £5.5 billion, significantly above the £3.2 billion average over the past six months. This increase was driven by deposits in interest-bearing instant access savings accounts. Money held by UK private non-financial corporations (PNFCs) increased £1.5 billion, in line with the recent average. This was driven by seasonal deposits from businesses in the retail industry.

There is a discrepancy between the total net finance raised and its components due to the seasonal adjustment methodology

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