Are Bank’s £78billion loans fuelling debt bubble?

FEARS are growing that the Bank of England is fuelling a dangerous bubble in consumer debt through cheap loans to high street banks.

They have borrowed £78billion from a low-rate fund set up by the central bank to help keep spending levels up after Brexit. In turn over the past year the high street has lent rapidly – with car loans, credit card balances and personal loans increasing by 10 per cent, far faster than incomes.

The Bank of England’s financial stability director Alex Brazier warned last month that Britain could be heading for another major financial crisis.

But as high street lenders ramp up their use of the central bank’s fund, there are fears it is helping to create the problem it is warning against.

Concern surrounds the risks for consumers if rates go up or they simply take on too much debt. Former pensions minister Baroness Altmann said: ‘It’s incredible that history is repeating itself.’ The Bank of England declined to comment.