LONDON (Alliance News) – British consumers have increased their personal bank deposits in the absence of higher yielding investments and amid fears over low wage growth, according to the British Banking Association.
BBA figures for UK high-street banks released on Wednesday show personal deposits have grown by GBP32.40 billion in the first eleven months of 2016, compared to GBP19.80 billion in the same period in 2015. Annual personal deposit growth in November was 4.8%.
“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, chief economist at the BBA.
“This growth in personal deposits may also suggest that consumers are looking to grow their cash reserves against potential economic uncertainties, such as an expectation of lower wage growth,” added Harding.
However, consumer credit demand remains strong, with annual growth in consumer credit at 6% in November. The BBA said credit growth continues to be supported by low UK interest rates.
Meanwhile, non-finance company borrowing decreased by GBP1.20 billion in November, which the BBA said was driven by the unwinding of short-term borrowing taken out in November.
However, the BBA noted lower demand for finance may also be due to companies reducing investment plans and shifting to using their internal funds rather than borrowing.
By Adam Clark; firstname.lastname@example.org
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