Personal deposits in UK grew by 4.8% yoy in November
British accumulate savings, preparing for economic uncertainty. The personal deposits in UK grew by 4.8% yoy in November, according to a study of the British Banking Association. In the period January-November 2016, the increase amounted to 32.4 billion GBP (39.7 billion USD). During the same period of 2015 growth was 19.8 billion GBP.
The British investors and depositors were surprised by the decision of the majority of voters in UK to leave the European Union (EU). This prompted the Bank of England (BoE) in August to lower the interest rate by 25 percentage points to a record low 0.25%. Although for now the economy is performing better than expected, many economists expect a slowdown in 2017, as business demands for more clarity on future relations between the UK and the EU single market.
“A corollary of a low interest rate environment is a growth in deposits, and we’ve seen personal deposits, in particular, grow more strongly in recent months as consumers hoard cash in the absence of higher-yielding, liquid investment opportunities”, said Rebecca Harding, a chief economist at the British Banking Association. “Particularly the personal deposits grow quite strongly in recent months. The customers accumulate funds in the absence of opportunities for lucrative liquid investments. This growth in personal deposits probably suggests that consumers are looking for ways to increase their savings, as countering potential economic uncertainty such as the slowdown in wage growth”, added she.
The data show that approvals for home loans fell by 9% yoy in November. Since the beginning of the year to the end of last month, the decline amounted to 4%.
Meanwhile, non-finance company borrowing decreased by 1.20 billion GBP in November, which the British Banking Association said was driven by the unwinding of short-term borrowing taken out in November.
However, the British Banking Association noted lower demand for finance may also be due to companies reducing investment plans and shifting to using their internal funds rather than borrowing.