UK borrowing slowdown may not be enough to allay concerns

Bloomberg

UK consumers are borrowing less freely as inflation bites and Britain prepares for Brexit, though the slowdown may not be enough to dispel concerns over the level of personal debt.
Unsecured lending growth slowed to 1.4 billion pounds ($1.7 billion) in February, below the 1.6 billion pounds averaged over the previous six months, data published by the Bank of England on Wednesday show. It left the annual rate at 10.5 percent, and borrowing on credit cards grew at the fastest pace in 11 years.
That’s making consumers a little more cautious, but policy makers and analysts remain concerned that the buildup of debt is unsustainable. The ratio of household debt to disposable income is high by international standards and has started to pick up again, after falling from about 160 percent before the 2008 financial crisis.
UK regulators are to review credit quality and lending standards, the Bank of England announced on Monday. The move came as Citigroup warned that consumers are taking out more unsecured debt than they can pay back, putting banks such as Lloyds Banking Group Plc and Barclays Plc at risk of loan losses.
One area of concern is the increased use of interest-free balance transfers on credit cards, which can encourage consumers to borrow heavily. The latest figures show credit-card debt climbed 9.3 percent in February from a year earlier, the fastest pace since February 2006. Other forms of consumer finance, including personal loans, overdrafts and car lending, grew an annual 11.1 percent.
Recent figures point to a slowdown in consumer spending, which has driven the economy since the June Brexit vote. Retail sales fell at their fastest pace in seven years in the three months through February and consumer confidence fell last month. Food and fuel prices are rising rapidly as a result of the 17 percent decline in sterling since the referendum.
Spending has in part been fueled by falling borrowing costs.