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Shoppers rush to pay credit card bills

Russell Lynch
Friday 31 August 2012 08:48 BST
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Nervous shoppers are paying off their credit cards at the fastest rate for nearly six years, the Bank of England said yesterday.

Its latest figures showed shoppers paying back £147m in July, the highest since August 2006. The caution comes against a backdrop of a double-dip recession and worsening prospects for the UK economy this year, according to the CBI and the British Chambers of Commerce.

Nida Ali, economic adviser to the Ernst & Young Item Club, said: "With the outlook so uncertain consumers may be tentative and the recovery is likely to be slow."

The mortgage market bounced back from a Jubilee slump in June as 47,312 loans for house purchases were approved, but lending remains nearly 10 per cent below the average of the last year. Figures from the Bank also showed average rates on outstanding mortgages edging up to 3.37 per cent, the highest for nine months.

The CBI blamed unexpected weakness in the first half and the eurozone crisis for hitting exports as it cut its growth forecast to minus 0.3 per cent for 2012 and 1.2 per cent next year.

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