"Overall, the balance of forces working for and against continued strong growth in the UK's business investment are erring towards the former. Business investment should continue to rise well in excess of overall GDP growth."
- Martin Beck, EY ITEM Club
Lending to British households rose in August to its highest monthly total in more than seven years, as an improving economy and low interest rates fuelled demand. According to the BoE's report, lending to consumers was 4.3 billion pounds in August, up from 4 billion pounds a month earlier, while markets anticipated the reading of 4.1 billion pounds in total. The increase was mainly boosted by home loans, as the net loans on property jumped to 3.4 billion pounds in August, showing the biggest climb since May 2008. Mortgage approvals increased to 71,030 in the reported month, compared with 69,000 in the preceding period, while economists forecasted a gain to 69,800. Recent figures added to evidence that the housing market is strengthening, with asking prices for the UK homes reaching record levels in September. The BOE report also showed that lending to businesses rose by two billion pounds in August, while loans to small and medium-sized companies increased by 284 million pounds.
Meanwhile, even though Britain's economic upturn is still heavily reliant on spending by households, the BoE claims that investment is playing an increasing role and that it is wrong to characterise Britain's recovery as being fuelled only by debt.
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