British card debt ticked down again in June to its lowest annual growth rate in more than five years, driven by economic chaos over the uncertain impact of Brexit. Overall the annual growth rate of total U.K. consumer credit slowed to its lowest growth since April 2014. The only bright spot is net borrowing for other loans and advances increased on the month to £0.8 billion, the highest since April.
According to figures released this morning by the Bank of England (BOE), U.K. consumer credit card lending settled at £72.9 billion for a 5.1% YOY (year-on-year) gain in June, compared to a revised £72.9 billion or a 5.5% YOY gain in May, and compared to a revised £72.8 billion for a 5.8% YOY increase for April 2019. One-year ago U.K. consumer credit card lending settled at £72.0 billion, increasing 9.4% annually, according to figures collected by CardData.
U.K. June Consumer Lending
U.K. other consumer loans, advances posted at £145.2 billion for a 5.7% YOY gain in June, compared to a revised £144.6 billion for a 5.7% YOY gain in May, and compared to a revised £144.3 billion for a 6.0% YOY increase for April 2019. One-year ago U.K. other consumer lending settled at £141.0 billion, growing 8.5% annually
U.K. total consumer credit reported at £218.1 billion for a 5.5% YOY gain in June, compared to a revised £217.5 billion or a 5.7% YOY gain in May, and compared to a revised £217.1 billion for a 5.9% YOY increase for April 2019. One-year ago U.K. total consumer credit card lending settled at £213.0 billion for an 8.8% YOY gain, according to figures compiled by CardData.
The BOE noted the extra amount borrowed by consumers to buy goods and services was £1.0 billion in June, in line with the average of the past year. Annual consumer credit growth rates have fallen steadily since its peak in late 2016, and particularly over the past year reflecting a fall in the average monthly net flow of consumer credit. Since July last year, the net flow has averaged £1.0 billion per month, compared with £1.5 billion per month in the year to June 2018.
Note: Lending to individuals is split between lending secured on dwellings (mortgages) and consumer credit. Consumer credit is further split between credit card debt and other loans and advances. Student loans are excluded.
U.K. June Consumer Spending
The British Retail Sales Index from the Office for National Statistics reports in the period between April and June retail sales increased by a mere 0.7% when compared with the period between March and May, wherein retail sales increased 1.6%. The growth was across all stores except department stores and household goods stores.
On an annual basis retail sales grew 3.8% in June, compared to annual growth of 2.2% in May.
In June, all online retailing accounted for 18.9% of total retailing, compared to 19.3% in May.
The ONS found in June, department stores continued the general downward trend as the only sector to show a fall in non-food stores, at negative 0.2% for the amount spent and negative 0.4% for the quantity bought. This was the sixth consecutive month-on-month decline for department stores.
U.K. June Consumer Confidence
The GfK Consumer Confidence Index for the U.K. declined to -13 in June 2019, erasing a 3-point rebound to -10 in the previous month and missing market consensus of -11, as global growth concerns and domestic policy uncertainty weighed on sentiment. GfK Strategy Director Joe Staton says U.K. consumers continue to remain concerned about the wider economy, over which the woman or man in the street has no control, of greater worry are the falls in the measures for personal finance. These better reflect our hopes and fears for our everyday financial futures and this, coupled with a decline in the Major Purchase Index, could point to a turbulent time for the economy over the summer months.
The Brits are continuing to face the double whammy as the Brexit on again and off again uncertainty has ticked off retailers . . . stockpiling and now overstocked with inventories, plus there are solid signs the slowing global economy will further add to British uncertainty and discomfort for the remainder of 2019 as the Brexit deadline date of Oct 31 looms notes Senior Analyst Robert McKinley for CardTrak, CardData, and CardFlash.
There is a clear consensus building the British economy may continue contracting through the rest of 2019 and possibly beyond. Analysts expect the British Pound will decline further to US$1.10, or possibly US$1.00 due to Brexit. However, the overall British economy will survive regardless of the outcome
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