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Bank of England Money and Credit Report

Bank of England Money and Credit Report

Broad money and credit, lending to individual and lending to businesses.


This report provides a comprehensive overview of the borrowing and deposit activities of households and businesses in the UK for the month of July. The data is crucial for the Bank’s policy committees to gain insights into economic trends and the state of the UK banking system.


Borrowing Trends

– Individual borrowing for mortgage debt grew for the third consecutive month, reaching £0.2 billion in July, up from £0.1 billion in June.
– Net mortgage approvals declined from 54,600 in June to 49,400 in July. Remortgaging approvals experienced a slight increase from 39,100 to 39,300 during the same period.
– The ‘effective’ interest rate on newly drawn mortgages rose by 3 basis points to 4.66% in July.

Consumer Credit

– Consumer credit borrowing decreased to £1.2 billion in July, down from £1.6 billion in the previous month.
– Borrowing through various consumer credit channels, including car dealership finance and personal loans, fell to £0.6 billion in July, while credit card borrowing remained steady at £0.6 billion.
– Annual growth rates for consumer credit decreased slightly to 7.3% in July, with credit card borrowing growth at 11.7% and other consumer credit growth at 5.5%.

Deposits and Withdrawals

– Households deposited an additional £0.4 billion in banks and building societies in July, driven by inflows into interest-bearing time deposit accounts and ISAs.
– There were net outflows of £10.2 billion from interest-bearing sight accounts and net outflows of £0.8 billion from non-interest bearing sight accounts.
– National Savings and Investment (NS&I) accounts saw a net withdrawal of £0.1 billion in July, compared to £0.2 billion in June.
– The effective interest rate on new time deposits increased to 4.94% in July.

Business Borrowing

– UK non-financial businesses borrowed £0.5 billion from banks and building societies in July, after net repayments of £6.0 billion in the previous month.
– Large non-financial businesses borrowed £0.9 billion, while small and medium-sized businesses (SMEs) continued net repayments.
– The annual growth rate of borrowing by large businesses increased to 1.3%, and SMEs saw a slight improvement from -4.3% to -4.2%.
– The cost of new borrowing for large businesses rose to 6.72%, while the effective interest rate on new loans to SMEs increased to 7.19% in July.

Market Finance and Business Deposits

– Private non-financial companies repaid a net £1.6 billion in market finance in July.
– UK non-financial businesses withdrew £8.0 billion from banks and building societies in July.
– The net flow of sterling money (M4ex) was -£0.3 billion, driven by changes in holdings of non-intermediate other financial corporations (NIOFCs), households, and private non-financial companies.
– The flow of sterling net lending to private sector companies and households (M4Lex) increased to £6.9 billion in July.

In conclusion

The data from July’s borrowing and deposit activities in the UK underscores various trends and shifts in both individual and business financial behavior. Notably, mortgage borrowing by individuals continued its upward trajectory for the third consecutive month, while consumer credit borrowing witnessed a decline. Changes in interest rates on mortgages and credit cards, as well as shifts in deposit patterns, reflect a dynamic financial environment.

For businesses, borrowing patterns exhibited a mixed picture, with large non-financial companies increasing borrowing while SMEs continued their trend of net repayments. Market finance dynamics revealed repayments by private non-financial companies, signaling potential shifts in corporate strategies.

The report also highlighted the complexities of the interest rate landscape, where effective rates on loans and deposits experienced fluctuations, influenced by various economic factors.

Furthermore, the movements in money flows, including households’ deposits and withdrawals, as well as changes in borrowing by non-intermediate other financial corporations and private sector entities, point towards evolving financial preferences and economic conditions.

This report offers valuable insights for policymakers, analysts, and stakeholders seeking to comprehend the intricate interplay between borrowing, lending, and deposits within the broader context of the UK’s economic landscape. It underscores the necessity for continuous monitoring and adaptation in response to these dynamic financial trends.

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