The amount of new credit issued in the UK went sharply negative in Q1 2018, dipping to a level it has not seen in six years according to research by Pantheon Macroeconomics.

The research suggests that consumers also abruptly increased their repayments of loans at the highest rate since records began in 2013, according to Pantheon Macroeconomics analyst Samuel Tombs.

Together, the two spikes — one down, one upward — send a worrying signal that British consumers are afraid of what’s ahead. GDP growth was just 0.1% quarter-on-quarter in Q1, and this is in part why the Bank of England did not raise interest rates.

New credit is often measured by a metric called “the credit impulse,” which is the change in new credit issued as a percentage of GDP. New credit declined by £6 billion in Q1. “The credit impulse, therefore, now is deeply negative; the £6B year-over-year drop in lending equates to 1.2% of quarterly nominal GDP. Tombs says  “The impulse hasn’t been this negative for the last six years.”

loan repayment

Source: Yahoo Finance