May 1, 2015 / 8:47 AM / 4 years ago

UK consumer credit booms in March, business lending jumps too

LONDON, May 1 (Reuters) - - Lending to British consumers jumped in March by its biggest amount since before the financial crisis and business borrowing showed its strongest rise in at least four years, the Bank of England said on Friday.

Customers shop at a Primark store on Oxford Street in London June 20, 2014. REUTERS/Luke MacGregor

The figures, which come less than a week before a national election, suggest underlying strength in the British economy despite some recent weak data.

The BoE also said mortgage approvals inched down after rising for three straight months.

The BoE said consumer credit grew by 1.24 billion pounds in March, higher than a forecast of 800 million pounds in a Reuters poll of economists.

That was the biggest monthly increase since February 2008 and compared with the same month last year, the increase was the biggest in nearly nine years.

Despite only weak rises in wages for much of the past five years, Britain’s economic recovery has become increasingly reliant on spending by households.

A nascent recovery in earnings and zero inflation have helped boost confidence among consumers, although that has not translated into a clear lead in opinion polls for Prime Minister David Cameron’s Conservative Party ahead of the May 7 election.

There was also a big jump in lending to business in March which was up by 2.72 billion pounds, the largest monthly increase since records began in mid-2011, the BoE.

The lending figures have been erratic and on year-on-year terms, lending to businesses in March was 0.5 percent lower.

Mortgage approvals for house purchases numbered 61,341 in March, down a touch from 61,523 in February.

Analysts in the Reuters poll had forecast 62,400 mortgage approvals were made in March.

The number of approvals fell in most months last year, when tighter lending rules were introduced, cooling house price growth and easing concerns about a bubble in the housing market.

Net mortgage lending, which lags approvals, rose by 1.83 billion pounds, in line with forecasts.

There have been recent signs that Britain’s housing market will regain strength this year. Mortgage lender Nationwide said house prices rose in April at the fastest monthly pace since last June, while the British Bankers’ Association has reported rising mortgage approvals in recent months.

Reporting by Andy Bruce and William Schomberg

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