The good news in mortgage numbers and consumer borrowings gives the government some ammo for the election but it will need to be sustained. It’s also good for the population if it carries on as it means that maybe, just maybe, we’re not going to see a return to the days of heavy debt burdens. That will be enforced if we start getting decent wage rises. The only slight from the consumer side was credit card borrowings rising to 295m from 276m in Nov. Given the data covers the holiday period, that’s not a bad rise in itself.
One swallow doesn’t make a summer so I’d want to see a trend develop before I start thinking that we’re getting somewhere in lowering debt levels.
Turning the page to businesses it’s a worse story for different reasons. Total lending to non-financials dropped 3.782bn from -0.079bn in Nov. Of that, SME lending was down -1.031bn from +0.301bn prior. I would like to think that coming out of the crisis businesses in general have made themselves more self sufficient and less reliable on debt, but that doesn’t mean there shouldn’t be a decent amount of credit flow. It’s either a reluctance of firms to borrow or evidence of still tight lending conditions.
I don’t want to see elevated levels of company debt but a nice steady flow that would indicate that UK companies are seeing decent activity and are happy to expand and use some borrowing to help that.
Again, it’s something we need to monitor over these early months and the numbers may get worse on election uncertainty
