Britons slow credit card spending and increase savings – for now
Borrowing on credit cards and short-term loans slowed in January to its lowest growth rate since September 2021 as the Omicron variant discouraged consumers from venturing out to shops, restaurants and bars.
Data from the Bank of England showed a net increase of £600m in consumer credit lending in January, a drop from an increase in December of £800m and £1.2bn in November.
Separate figures covering savings showed that households deposited £7.7bn in January, up from £2.7bn in December, to emphasise the retreat back to a pattern of low spending and high saving seen during much of the pandemic.
Debt charities said the worsening cost of living crisis after a dramatic rise in food and fuel bills was likely to push consumer credit higher during the spring.
Richard Lane, director of external affairs at the debt charity StepChange, said: “The months ahead look sobering in terms of the pressures on UK household finances, with the known rises in national insurance and energy prices exacerbated further now by all the uncertainty in the geopolitical environment.”
Joanna Elson, chief executive of the Money Advice Trust, which runs National Debtline, said: “With food and fuel prices continuing to rise, and energy costs set to soar, our fear is that many more people will be pushed into difficulty in the coming months.
She criticised government plans to offset rising bills with a £150 rebate on council tax bills in April and a £200 loan in October as inadequate, adding that the chancellor, Rishi Sunak, should “significantly uprate benefits and increase assistance through the warm homes discount”.
Thomas Pugh, economist at the accountants RSM UK, said the easing of Covid restrictions in February would combine with rising costs to push spending
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