British consumers took out more in credit over November than expected despite suggestions that Budget speculation would have held people back from taking risks, official data has shown.
Economists widely predicted that weeks of speculation over tax rises dampened consumer sentiment and prevented people from borrowing more.
But the Bank of England has revealed that there was a rise in consumer credit to £2.1bn, compared to £1.7bn in October.
Borrowing through credit cards was £1bn over the month while other forms of consumer credit through motor finance and personal loans slightly increased to £1.1bn.
Forecasters expected the rise in consumer credit to be £1.1bn given low consumer confidence was expected to translate into household spending plans being put on hold.
The Bank’s money and lending data release also showed that the number of mortgage approvals slightly dipped from 65,010 to 64,530 while net borrowing of mortgage debt increased to £4.5bn.
Capital Economics analysts said the latest mortgage data pointed to annual house price growth accelerating from 0.6 per cent in December to “just below 5 per cent” in a few months, though high rates could mean a slower rise in house prices.
They also said that consumer spending would not rise by larger amounts over the course of this year given results were higher than expected.
“[Today’s release] suggests there isn’t much scope for a pick-up in consumer spending in 2026,” Alex Kerr, UK economist at the economics consultancy, said.
“Our forecast that annual real household disposable income growth will slow means we think annual consumer spending growth will move sideways from 0.8 per cent in 2025 to 0.7 per cent in 2026.”
Brits looked past Budget speculation
Elliott Jordan-Doak of Pantheon Macroeconomics suggested that “broader economic activity” would increase this year due to “more certainty” over tax measures laid out by the Chancellor.
“Hard data seem to be holding up better than estate agents’ fears,” Jordan-Doak said.
“The Bank of England’s cut to interest rates in December will also provide support for approvals heading into 2026, and we think the bigger picture for the housing market in 2026 will be one of recovery.”
There was also some evidence that businesses were looking beyond the Budget, with total bank lending to firms rising by 5.3 per cent year-on-year compared to a 5.1 per cent growth rate in October.
Lending to bigger businesses continued to be higher than for smaller businesses, though lending to small businesses hit its highest level since July 2021.