UK bank card borrowing rises at quickest annual charge in nearly two years

[ad_1] Bank card borrowing rose on the quickest annual charge for nearly two years in November, in line with the Financial institution of England, as households took on debt to finance the rising value of Christmas.

In a snapshot protecting the month of Rachel Reeves’s extremely anticipated autumn finances, the central financial institution mentioned people borrowed a further £2.1bn in shopper credit score, up from a £1.7bn enhance in October.

Web borrowing via bank cards was £1bn, up from £700m a month earlier. Borrowing utilizing different types of shopper credit score – together with automotive dealership finance and private loans – rose by £100m to £1.1bn.

Annual progress in bank card borrowing rose from 10.9% in October to 12.1% in November – the very best charge since January 2024.

Specialists mentioned the figures may mirror folks borrowing extra within the vital pre-Christmas procuring interval, as households come beneath mounting strain from the rising value of residing.

Simon Trevethick, of the StepChange debt charity, mentioned: “For a lot of households, the rise in shopper credit score borrowing in November could mirror the fact that on a regular basis prices have gotten tougher to handle with out turning to credit score.

“The rise may additionally point out folks borrowing extra in preparation for the festive interval – our personal polling discovered that 14 million folks would battle to afford Christmas.”

Whereas the UK’s annual inflation charge has fallen again to three.2%, it's nonetheless above the official 2% goal and costs stay considerably increased than in recent times. Shoppers additionally paid extra for festive treats in contrast with final 12 months, after a pointy rise in meals costs.

Separate figures from the British Retail Consortium (BRC) present the annual charge of store value inflation picked as much as 0.7% in December, from 0.6% in November.

The rise was fuelled by an increase in meals value inflation to three.3%, up from 3% in November. This was offset by a drop in non-food costs, which fell by 0.6% in contrast with the identical month a 12 months earlier amid steep discounting by retailers.

Helen Dickinson, the chief govt of the BRC, mentioned: “Customers nonetheless discovered loads of worth throughout many Christmas necessities together with greens, cheeses, and alcohol, serving to households to benefit from the festive season.

“Promotions have been additionally widespread throughout widespread gifting classes, together with toys, books, and residential leisure.”

British shoppers had proven reluctance to spend in late 2025 amid intense hypothesis over tax will increase within the chancellor’s finances. Official figures present retail gross sales volumes unexpectedly fell by 0.1% in November. A research by the accountancy group KPMG additionally discovered considerations over the well being of the financial system have been holding shoppers again.

Economists mentioned the expansion in shopper credit score may point out an early rise in confidence amongst households to make use of borrowing to finance their spending. Nonetheless, households elevated their deposits with banks and constructing societies by a further £8.1bn in November, up from £6.7bn in October.

Reflecting a pre-budget slowdown within the UK property market, web mortgage approvals for home purchases fell by 500 to 64,500 in November.

Alex Kerr, a UK economist on the consultancy Capital Economics, mentioned the rise in financial institution deposits may mirror folks reorganising their funds in anticipation of tax adjustments in Reeves’s finances. Nonetheless, the rise was a lot smaller than a £20.2bn rise in deposits in October 2024, earlier than the chancellor’s first autumn finances.

“That means nervousness about forthcoming tax rises didn’t put shoppers off borrowing in November,” Kerr mentioned. “Total, as we speak’s launch provides to the proof that hypothesis about tax rises forward of November’s finances didn’t affect households’ spending selections an excessive amount of. This additionally suggests there isn’t a lot scope for a pickup in shopper spending in 2026.”