UK consumer credit grows by less than expected in March

(Sharecast News) - UK lending to individuals picked up in March, but some economists saw signs of caution on the part of consumers in the latest data, even before the recent announcement of US trade tariffs. In seasonally adjusted terms, total net lending to individuals grew by 0.7% month-on-month in March, or by £13.8bn, to reach £1,899.7bn, the Bank of England said.

Within that, consumer credit grew by £0.9bn or 0.4% on the month (consensus: £1.2bn), following a £1.3bn rise in February, hitting £235.9bn in the process.

Mortgage debt increased by £13.0bn in March, following a £3.3bn rise during the previous month, to reach £1.663bn.

The number of mortgages for home purchase meanwhile declined for a third month running, by 784 to 64,309 (consensus: 64,800).

Commenting on the latest figures, Ashley Webb at Capital Economics highlighted how the gain in consumer credit was lower than the average of £1.2bn recorded during the previous six months.

"This suggests households started to spend a bit more cautiously amid the weakening employment outlook even before the new US tariffs regime hit consumer sentiment in April," he said.

"[...] Overall, today's data release suggests households started to tighten their purse strings amid the weakening economic outlook. If the recent drop in consumer confidence is sustained, consumer spending may be a bit softer than we expect this year."