January 4, 2019 / 9:37 AM / 9 months ago

UK consumer lending growth slows to near four-year low as Brexit approaches

LONDON, Jan 4 (Reuters) - Lending to British consumers grew at its slowest pace in nearly four years in November and the number of mortgage approvals fell, Bank of England data showed, adding to signs of a pre-Brexit slowdown in the economy.

FILE PHOTO: People walk through the Canary Wharf financial district of London, Britain, December 7, 2018. REUTERS/Simon Dawson/File Photo

The annual growth rate in unsecured consumer lending slowed to 7.1 percent from 7.4 percent in October, the BoE figures showed, the slowest increase since March 2015.

There have been signs from many retailers that British consumers reined in their spending in late 2018, faced with the possibility of the country leaving the European Union without a deal to smooth the economic shock.

Prime Minister Theresa May faces a make-or-break vote on her Brexit plans in the week of Jan. 14, little more than two months before Britain is due to end its membership of the EU.

A survey of Britain’s dominant services industry published on Friday suggested the economy grew by just 0.1 percent in the fourth quarter of 2018, compared with the previous three months, as uncertainty about Brexit mounted.

The BoE said the number of mortgages approved for house purchase fell to 63,728 in November, the lowest figure since April and down from 66,709 in October.

The figure was below all forecasts in a Reuters poll of economists.

Britain’s housing market weakened in 2018 with major mortgage lenders reporting price growth at a five-year low.

Nationwide said earlier on Friday that prices fell in December by the most in monthly terms since mid-2012 and rose at their slowest annual pace in nearly six years.

The BoE data showed net mortgage lending, which tends to lag behind approvals, at 3.453 billion pounds in November, up from 4.089 billion pounds in October.

BoE Governor Mark Carney warned last month that in the event of a “disorderly” departure from the EU — which is not the central bank’s base-case scenario — house prices could slump by 30 percent as part of a broader economic shock.

The central bank has also said demand for consumer lending had been subdued by Brexit uncertainty, but might ramp up again once the situation is clearer.

Figures for November alone showed a 924 million-pound net increase in consumer lending, slightly weaker than economists’ forecasts.

The BoE also said net gilt purchases by foreign investors totaled 2.387 billion pounds in November compared with a revised lower 5.014 billion pounds in October and 8.649 billion pounds in November 2017.

(Reporting by William Schomberg and Costas Pitas)

uk.economics@reuters.com, +44 20 7542 5109

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