British banks are planning the biggest squeeze on consumer credit since late 2008, when the economy was in the depths of recession, according to a Bank of England survey. The Bank reported. “Motivations for this included concerns about customer indebtedness and the squeeze in real incomes.”
The clampdown follows warnings that Britain’s debt mountain has risen to dangerous levels as households struggle with rising shop prices and low wage growth. The survey showed the net balance of lenders’ expectations for the availability of unsecured lending to households over the next three months fell from -16.2 to -28.6, indicating the sharpest drop since the fourth quarter of 2008, when the UK economy contracted by 2.2%.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said: “It does look like banks are starting to clamp down on the supply of unsecured credit.”
Lenders made it more difficult for consumers to take out new credit cards and unsecured loans such as overdrafts in the third quarter, tightening lending criteria and approving fewer applications.
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