Laura Suter, head of personal finance at AJ Bell, comments on the latest Bank of England figures on lending and saving:
“The nation got a head-start on its Christmas shopping this year, with the combination of Black Friday discounts, and worries about delivery delays and stock shortages all meaning that spending shot up in November. The nation is rapidly forgetting its frugal lockdown ways, with borrowing rising and the amount we’ve stashed away in savings falling, even compared to pre-pandemic levels.
“Brits turned to the plastic for their pre-Christmas shopping, with £900m added to credit card debt in November, taking total net borrowing in the month to £1.2bn – the highest level since lockdown eased in July 2020. It’s a stark contrast to November last year, when Brits actually repaid £915m of credit card debt rather than adding to borrowing. It even looks high when compared to the pre-pandemic December peak of £681m being spent on plastic in December 2019.
“The good savings habits many people got into during lockdown also showed signs of dwindling in November, with the amount saved into cash accounts below pre-pandemic levels. In November £4.5bn was saved in banks and building society accounts and another £200m with NS&I – 60% lower than the average of the past 12 months.
“The average interest rate on those savings increased by just 1 basis point in the month, showing why the nation’s enthusiasm for saving might be wearing a little thin, as they are rewarded with such measly returns. We’ll see this interest figure tick up slightly in December’s data, following the Bank of England’s rate hike, but it’s unlikely to be enough to drive a savings revolution among the population.”
