U.K. Firms Building Up Cash, Stock Reserves Ahead of Brexit
(Bloomberg) -- Businesses are building up cash as Britain moves closer to leaving the European Union without a deal in place, according to data from UK Finance.
Deposits held by non-financial companies at main high street banks grew by 3.5 percent in the year to December, with the biggest growth seen in the retail, transport, and power sectors. The report also showed that loans to manufacturers climbed 8.4 percent in a year that saw an overall contraction in borrowing by U.K. firms.
“This may in part be driven by manufacturing businesses stockbuilding in the face of ongoing economic uncertainty,” said Stephen Pegge, managing director for commercial finance at UK Finance. “The year end has also seen a renewed increase in business deposits, particularly within the construction and retail sectors, suggesting firms are preparing for uncertain trading conditions by building up their cash reserves.”
The figures also underscored the weakness of the U.K. housing market, with the number of mortgages approved in December dipping to a three-month low of 38,779, below the average of the previous six months.
Consumers meanwhile paid down credit-card debt, with repayments exceeding borrowing by 20 million pounds ($26 million), the most since April 2016.
“This reflects the growing trend of consumers using credit cards as a preferred payment method rather than as a means of borrowing, in order to take advantage of additional protections and value-added benefits,” said Eric Leenders, managing director for personal Finance at UK Finance.
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