Shoppers defy the Brexit blues
Credit spending spree after EU exit vote
BRITS banished Brexit fears to go on a credit-fuelled spending splurge last month.
Households slapped £291million more on their credit cards than they repaid in July, according to figures from the British Bankers’ Association.
The jump, up nearly a fifth on July 2015, came despite reports that consumer confidence had tanked in the wake of the vote to leave the EU.
Data has also shown strong shop sales last month.
The BBA says there were 168.1million credit card transactions last month, compared with 156.8million in July 2015.
The rise left credit card holders owing a record £42.6bn.
Experts worry that the borrowing binge, fuelled by record low interest rates, is storing up problems for the future.
Joanna Elson, chief executive of the Money Advice Trust, which runs National Debtline, said: “Most people will be able to handle this extra borrowing but we are concerned that a minority of households risk being left further exposed to financial difficulty if the economy does suffer in the longer term.”
While credit card lending rose, the amount of new debt taken on through personal loans and bank overdrafts dipped last month.
Economist Howard Archer said: “We suspect that the fundamentals for consumers will become less favourable, with purchasing power likely diminishing and the labour market softening.”
Meanwhile, the BBA data showed mortgage lending slumped to an 18-month low in the wake of the Brexit vote. Banks handed out 37,700 home loans last month, 5.3% fewer than in June and down almost 19% year on year.
Samuel Tombs, of Pantheon Macroeconomics, said: “July’s mortgage approvals data brings clear evidence that the Brexit vote has made households reluctant to undertake major financial commitments.”
Others believe the drop was caused by a stamp duty rise in April.
Experts reckon property prices will fall, but other data suggests many firms have shrugged off concerns over Brexit.
BUSY Shop sales remained strong last month