UK takes tougher approach to consumer lending boom

The Bank of England took a tougher approach towards banks over their booming lending to UK consumers, ordering them to apply credit rules prudently and prove by September they are not being too complacent about risks to their balance sheets.

The Bank of England, which has powers to force firms to curb their lending, said last week it had spotted weaknesses in the way companies have been ramping up their offers of credit to consumers who are the main driver of Britain’s economy.

Consumer borrowing is growing at more than 10% a year, while the household savings rate has hit an all-time low, raising concerns that some British people are overstretching themselves and could struggle to make repayments if interest rates rise.