According to official data, household borrowing increased in November for the first time since the pandemic began, indicating that the economy may strengthen before the Omicron coronavirus variant spreads.

According to consumer credit data from the Bank of England, net borrowing in the penultimate month of 2021 increased by 1.2 billion pounds, driving a 0.4% increase in total credit over the same month of the previous year. This is the first time the annual interest rate has risen since March 2020. When the coronavirus hit the UK.

This is higher than the 800 million pounds of net borrowing predicted by economists surveyed by Reuters, of which credit card spending accounted for most of the data, the highest level since July 2020.

Following the mediocre performance last month, the recovery of household borrowing in November is considered to be a sign of increasing economic momentum. Capital Investment Macros UK economist Bethany Beckett said: “The healthy growth of consumer credit in November is further evidence of increased economic activity in the middle of the fourth quarter.”

Data from the Bank of England showed that household savings fell in November, with banks and building associations depositing 4.5 billion pounds. This is less than half of the monthly average of £11.2 billion for the 12 months ending in October 2021. Also lower than pre-pandemic levels: in the 12 months to February 2020, the average savings level was 5.5 billion pounds.

But some economists warned that rising inflation may promote a rebound in consumer credit. In November, the UK consumer price index rose to a 10-year high of 5.1%.

“This kind of downshift [in savings] According to Samuel Tombs, chief British economist at Pantheon Macroeconomics, this seems to reflect households trying to maintain actual consumption while inflation is soaring, rather than rapidly strengthening the recovery.

RSM UK economist Thomas Pugh said that combined with the strong retail sales data in November (up 1.4%), the latest data from the Bank of England indicated that consumer spending was “strong” in November. But he agrees that inflationary pressure means that the increase in household borrowing “may not fully translate into real GDP growth.”

Beckett said that she estimates that the GDP growth rate in November will reach 0.5%, higher than the 0.1% in October, and she expects a growth rate of 0.6% in the last quarter. This is much lower than the 1.1% GDP growth in the third quarter.

But she said that economic growth will be hit in December as the Omicron variant begins to spread rapidly.High-frequency data, such as retail traffic, restaurant reservations, and sandwich bar transactions, indicate economic conditions Sign up Last month, consumers were reluctant to go out due to the surge in the number of infections, and many people were forced to self-quarantine.

Beckett said that she expects the UK economy to shrink by 0.8% in December, and the outlook will still be “shaded by the prospect of large numbers of people isolating themselves at the same time”.

Tombs said that the impact of the new coronavirus variant means that household savings may “maintain high at least until March, when Omicron should retreat”.