Credit card borrowing grew at the fastest pace since 2005 during the 12 months to July as UK consumers came under increasing pressure from the cost-of-living crisis.
Figures from the Bank of England show an increase of £740 million on the month, down from a £945m increase in June but 13 per cent higher than the year before, the biggest annual rise since October 2005. The average interest rate on credit card borrowing rose to 21.7% in July.
"Rising interest rates are also being passed onto borrowers meaning borrowing is more expensive than at any point since 2008 – at the precise moment when millions are reliant on borrowing to survive," said Neil Kadagathur, chief executive of loan provider Creditspring.
Consumer price inflation hit a 40-year high of 10.1% in July and regulators plan to increase household energy tariffs by 80% in October, with further increases all but certain in January. Goldman Sachs warned that UK inflation could exceed 22% early next year if energy prices stay high.
Broader consumer credit - which includes unsecured personal loans and overdrafts - grew at the fastest annual rate since March 2019, up 6.9%.
Paul Dales, chief UK economist at Capital Economics, said credit growth was more often associated with stronger consumer demand, but high inflation made the numbers harder to interpret.
"As these data are in nominal terms, they are being supported by the rise in prices and are therefore perhaps suggesting that consumer spending is more resilient than it really is," he said.
Dundee lands major wind farm contract
The Port of Dundee has been chosen as the marshalling site for construction of what will be Scotland's largest offshore wind farm when it is commissioned later this decade.
The port's renewables hub will take delivery of turbine blades, towers and nacelles, which house the turbine generators, for pre-assembly before they are shipped for installation at the 1.1GW Inch Cape wind farm located 12 km off the Angus coast. Inch Cape – a joint partnership between China's Red Rock Power and Irish energy firm ESB – has reserved the entire renewables hub from March 2025 to March 2026.
Mark Williamson: SNP Government could use funds wasted on £2bn bank to insulate thousands of homes amid energy crisis
As Scots face an 80 per cent increase in average energy bills to £3,549, the SNP Government could improve on its response to the crisis by using funds earmarked for the ‘ill-conceived’ £2 billion bank it founded.
After convening a summit at which energy leaders and consumer groups discussed the energy crisis last week, Nicola Sturgeon said the Government she leads could do little to alleviate a problem that had to be tackled at source by the Westminster administration.
That claim however underplayed the potential for the Scottish Government to do much more to help ease the pressure on households amid fears this could persist for many months.
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