Britons’ Mounting Debts Are Making Them Gloomy About the Future

(Bloomberg) -- The Bank of England may not be worried about U.K. household debt, but it looks like ordinary people are.

Even though employment, income and spending levels are rising, Britons’ well-being isn’t improving, Office for National Statistics data published Monday showed. That may be due to concerns about rising debt repayments, it said.

The BOE has been relatively sanguine about debt levels, with Deputy Governor Ben Broadbent last month describing suggestions that they’re unsustainably high as “slightly puzzling.” That’s a slight softening of rhetoric from BOE officials, who have previously expressed concern about the rapid buildup of debt used to finance cars and other goods.
The amount U.K. residents pay in interest on loans is now the highest seen since the start of 2009, with recent increases driven by payments on unsecured borrowing such as on credit cards and overdrafts, the ONS found. Household spending has outgrown income for the past two years, which is linked to analysis that “households are spending beyond their means,” it said.

It is also weighing on people’s optimism about their own financial situation and that of the overall economy over the next year, according to European Commission data.

Now the boom looks to be slowing. Consumer credit grew at its weakest annual pace in four years in December, while borrowing on credit cards rose the least since 2014.

©2019 Bloomberg L.P.