Consumer lending in Britain rose at the fastest pace in nearly five years and new mortgage approvals grew faster than expected as signs of the nascent economic recovery continue.
Bank of England data published Monday showed a massive £1.2bn surge in consumer credit, including bank overdrafts, the biggest monthly advance since February 2008. At the same time, mortgage approvals for the month of September surged past 50,000 and new home loans grew by £491m.
The figures add more depth to a series of economic data which indicates that Britain has firmly exited its first double-dip recession since the early 1970s. Earlier this month the Office for National Statistics said the economy grew at its fastest quarterly pace in five years and that employment rose to a record 29.59 million. Inflation also eased to three-and a half year low of 2.2 percent last month, the ONS said.
The data may also persuade the Bank's Monetary Policy Committee to maintain its £375bn programme of asset purchases, known as quantitative easing, when its concludes its next rate-setting meeting on 8 November.
"These results are the final nail in the coffin for QE and rate cuts," Scotiabank economist Alan Clarke told Reuters. "The headwinds facing the consumer have abated to some extent."
House prices around the country remain subdued, however, despite the new lending figures. Hometrack said Monday that UK prices fell for a fourth consecutive month in October - by 0.1 percent - and warned that demand for new homes is "likely to slow in the run-up to the year-end with agents looking to push through as many sales as possible," according to research director Richard Donnell.
Credit growth has been a major objective of both the government and the Bank of England, which jointly launched a "Funding for Lending" (FLS) scheme in August with the aim of generating £80bn in new company loan.
The Banks' chief economist, Spencer Dale, told the BBC last week that "the ability for many households, many families and many small companies to access credit has been a major factor dampening our growth over the past couple of years" while touting the effectiveness of the FLS programme.