Borrowing by British consumers rose in May, adding to the wealth of statistics showing that increasing living costs and decreasing wages are tightening budgets for families in the UK.
UK consumers are increasingly turning to credit cards, overdrafts and loans to support their spending, according to the latest figures from Bank of England released on Friday. Their monthly report on money and credit found that the outstanding amount of unsecured consumer credit rose by 10.3 percent in May, providing fresh evidence that Brits are looking for ways to offset and balance their spending as belts grow tighter.
Banks to set aside extra capital
As consumers increasingly turn to credit to fund their living costs, earlier this week the Bank of England announced that it would force banks to strengthen their financial position.
Banks will now need to set aside as much as £11.4 billion of extra capital in the next 18 months to provide a buffer against the 10 percent rise in consumer lending over the year.
Households increasingly squeezed – ONS
Data from the Office for National Statistics confirmed that UK consumers are suffering from an income squeeze and declining living standards, with household disposable income, adjusted for inflation, falling for the third quarter in a row between January and March.
It dragged the household saving ratio to new record low of 1.7 percent, as consumers grappling with rising prices and weak pay growth run down their savings.