UK consumers raise borrowing at weakest pace in five years, adding to slowdown signs

FILE PHOTO: A pedestrian shelters under a Union Flag umbrella in front of the Bank of England, in London, Britain August 16, 2018. REUTERS/ Hannah McKay

LONDON, July 1 (Reuters) - Lending to British consumers rose by its weakest pace in more than five years in May, according to Bank of England data which added to signs of a slowdown in the economy.

The annual growth rate in unsecured lending to consumers - whose spending has helped the economy cope with the Brexit crisis - slipped to 5.6%, the smallest rise since April 2014 and down from 5.9% a month earlier, the figures showed.

The BoE said the number of mortgages approved for house purchases fell to 65,409 in May from 66,045 in April.

That was almost in line with a median forecast of 65,600 in Reuters poll of economists.

Britain’s housing market weakened in 2018 and is still struggling for momentum.

The BoE data showed that net mortgage lending, which tends to lag behind approvals, fell to 3.102 billion pounds in May, the weakest increase since April 2017.

Figures published last week by UK Finance, an industry group, showed British banks approved slightly fewer mortgages for house purchase in May than in April but overall lending remained robust.

The BoE’s figures for May alone showed a 822 million-pound increase in consumer lending, compared with economists’ forecasts of a rise of just under 1.0 billion pounds.

The BoE said net gilt purchases by foreign investors totalled 10.444 billion pounds in May compared with 1.199 billion pounds in April.

Reporting by William Schomberg and Alistair Smout