Britain’s economic recovery was cast into doubt by data showing its manufacturing sector stalled unexpectedly in August and that increased lending is having little effect.
Bank of England data shows that outstanding loans to companies and individuals declined at a record pace in July, in a worrying sign for the prospects of economic recovery. Moreover, private non-financial corporations form the backbone of the nation’s economy – paid down £8.4bn of debt during the month. That represented a 1.7% overall drop in their bank credit and the largest decline since records began in 1997.
Households showed no more propensity to spend; net lending to individuals fell by £600m to just over £1,450bn, the first net repayment of consumer loans since records started in 1993. The weak level of lending came as loans secured against property and consumer credit both declined by record amounts.