UK consumers borrowed £ 400million in August as restrictions eased

British consumers borrowed an additional £ 400million (€ 462.4million, $ 538.2million) in August as Covid-19 restrictions continued to ease, according to Bank figures ‘England (BoE).

His latest analysis reveals that individuals have put an additional £ 200million on credit cards and taken out £ 200million on other forms of consumer credit, such as car financing.

The data also showed that the effective rate on new personal loans remained below the January 2020 level at 5.87%, although it was the highest since March 2020.

Less than before the pandemic

However, Laura Suter, personal finance manager at AJ Bell, pointed out that credit card borrowing, personal loans and auto financing in August were still a third of pre-pandemic levels.

“Part of this will be due to the lack of new car sales leading to lower auto finances, but it’s also because as a nation we are borrowing less on credit since the pandemic reset the finances of many. people, ”she said.

The BoE’s analysis showed how, on average, £ 1.2bn of consumer credit was borrowed, per month, in the two years leading up to February 2020.

Household deposits

Households saved an additional £ 9.1bn from banks and building societies in August, compared to an average net flow of £ 8.5bn between April and July.

“The August flow is relatively large compared to pre-pandemic levels: in the year to February 2020, the average flow was £ 4.7 billion,” the statement said.

However, the effective interest rate paid on new term deposits from individuals to banks remained at 0.29%.

Low interest rates

According to a press note, Sarah Coles, personal finance analyst at Hargreaves Lansdown, said the average easy access rate had fallen to a new and even more miserable 0.09%.

“Most of us earn next to nothing in miserable Main Street accounts, and in such a dismal savings landscape, we don’t see the point in changing,” she said.

She pointed out that Hargreaves Lansdown’s research found that half of savers haven’t changed accounts in the past five years (49%), and 37% have never moved.

Make ends meet

Nitesh Patel, strategic economist at the Yorkshire Building Society, pointed out that not everyone has had the chance to save money in the past year.

“Many low-income households have struggled to make ends meet during the pandemic, either because of the loss of their jobs or because of reduced incomes,” Patel said.

“This, combined with the pressures of rising inflation and upcoming tax hikes, will add further constraints to their already low level of financial resilience,” he added.

Read more: UK mortgages increased in August, but market slows

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