Britain’s lenders are failing to pass on cuts in interest rates to consumers, undermining efforts to get credit flowing around the economy again, according to data published yesterday by the Bank of England.

While banks and building societies have cut the interest rates at which they grant mortgages, they are far from matching the Bank’s reductions in official interest rates. Meanwhile, interest charged on per sonal loans, overdrafts and credit cards has risen.

Evidence of tight consumer credit emerged as a senior Bank of England official warned against making too much of recent signs that the economy is beginning to recover.

Financial Times