U.K. Borrowing Slump Casts Fresh Doubt Over Strength of Economy

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(Bloomberg) -- U.K. household borrowing slumped to its weakest in 5 1/2 years in March.

Unsecured credit rose just 254 million pounds ($348 million), the lowest since November 2012 and well below the 1.5 billion-pound average of the previous six months, the Bank of England said Tuesday. Mortgage approvals dipped to 62,914, the lowest level this year.

The figures possibly reflect bad weather in March that kept consumers out of the shops, but also a loss of underlying momentum. Data last week showed the economy barely grew in the first quarter in its weakest performance since the end of 2012.

Annual consumer-credit growth slowed to 8.6 percent, the lowest since November 2015. Borrowing is now expanding below the 10 percent pace that had triggered alarm among BOE financial-stability officials.

There is growing evidence that lenders and consumers are becoming more cautious. In its latest Credit Conditions Survey, the BOE said both the availability of unsecured credit to households and demand for loans fell in the first quarter as the economic backdrop weakened.

Loans to non-financial firms rose by 4 billion pounds, the BOE said.

The mortgage figures reinforce a picture of a property market under strain from Brexit uncertainty, tax changes, the inflationary squeeze on incomes and higher interest rates. The slowdown is being felt most keenly in London, where values are falling on an annual basis for the first time since 2009.

The BOE said non-resident investors sold a net 5 billion pounds of U.K. government bonds in March. They bought 11.6 billion pounds of gilts in February.

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