UK Banks Cautious on Consumer Lending Amid Fears of Slowing Economy

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The availability of consumer credit in the UK economy tightened in the second quarter and is expected to decline further as banks turn cautious amid a worsening in Britain’s economic outlook, according to the Bank of England. Retail banks and other lenders told the BoE they had cut back on the supply of unsecured lending – which includes credit card loans – in the three months to the end of June, the Financial Times reported. Supply is expected to tighten further this year, according to the BoE’s quarterly credit conditions survey, which said banks’ appetite for risk was being effected by a “changing economic outlook”. The UK economy has been driven by strong consumer spending in the aftermath of the Brexit vote last year. But growth fell back sharply in the first quarter of 2017 – from 0.7 per cent to 0.2 per cent – raising concerns growth is not sustainable. Higher inflation and weak wage growth have squeezed UK consumers, with average real pay falling by 0.7 per cent in the three months to May. Demand for credit has also boomed as Britons are saving the lowest proportion of their income since at least 1963, according to official data. Read more. (Subscription required.)