UK credit card borrowing rises at fastest rate for five years
Credit card borrowing in the UK increased at its highest rate for five years, potentially fuelling fears that the economic recovery may be too reliant on consumer debt.22 May 2014
Shoppers made 197m card purchases in March totalling £11.8bn, 13% and 8% higher respectively than during the same month a year ago, according to monthly data from the British Bankers Association (BBA).
Borrowing amounts are rising - allowing for debt write-offs and therefore reflecting cardholder activity - by 5.2% annually, the BBA said.
BBA Chief Economist Richard Woolhouse said: "Borrowing has been growing at an annual rate of nearly 6% – higher than at any time over the past five years.
"This reflects higher consumer confidence amid an improving economy with buoyant housing, retail and durable goods markets."
The figures are likely to cause fresh questions among economists about the sustainability of the economic recovery.
Critics have voiced concern that the revival is too dependent on a resurgence in debt-fuelled consumer spending and have called on the government to do more to rebalance the economy towards manufacturing and exports.
Bank of England consumer borrowing figures earlier this month showed net unsecured consumer credit rising to an 18-month high of £1.1bn in March.
Howard Archer at IHS Global Insight said it was likely to fuel concerns about over-reliance on borrowing, but he added that until March's jump, unsecured consumer borrowing had remained relatively limited compared to long-term norms.