| UK lending remains weak |
| 31.01.12 12:19 | |
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Bank of England (BoE) lending data for December were weaker than expected across the board. Net consumer credit fell £0.4bn (consensus: £0.4bn, BarCap: £0.5bn), the largest drop since records began in 1993. Net mortgage lending was £0.7bn (consensus/BarCap: £0.8bn), while the number of mortgage approvals for house purchase was 52.9k (consensus: 54.0k, BarCap: 54.7k). Broad money supply continued its downward trend with the M4 money supply measure falling by 1.4% m/m and 2.5% y/y. Excluding intermediate and other financial corporations (the MPC's preferred measure), M4 money supply was not as weak, falling by 0.7% m/m and 0.8% 3m/3m (annualised). On the other hand, M4 lending (excluding the effects of securitisation) increased by 0.5% m/m and 3.5% 3m/3m (annualised). The sectoral breakdown showed that M4 lending to the household sector decreased by £0.2bn and lending to private non-financial corporations weakened further, falling by £5.5bn, compared with an average monthly decrease of £1.3bn during the previous six months. The December data continued to indicate weak lending flows, a picture that has been broadly the same since the onset of the financial crisis (see chart). Unsecured credit was particularly weak in December, reporting the biggest monthly fall since records began in 1993, while net mortgage lending remained at historically low levels. In the face of the current stagnant economic outlook we do not expect a turning point in lending activity in the coming months, but expect a continuation of the current weak but broadly stable performance. source: BarCap |
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