Britain’s booming construction industry and fast-rising house prices suggest the economy finished 2013 on a high but a sharp fall in business lending raises doubts about how sustainable the recovery will prove…
Britain’s booming construction industry and fast-rising house prices suggest the economy finished 2013 on a high but a sharp fall in business lending raises doubts about how sustainable the recovery will prove.
Friday’s lending, housing market and construction figures from the Bank of England, major mortgage lender Nationwide and data company Markit were all strong, as were Christmas sales numbers from big clothing retailer Next. However, the central bank and other economists say Britain needs more exports and business investment to fortify growth in 2014 and shake off a dependence on consumers saving less and spending more. Britain’s economy grew at an annualized rate of more than 3 percent in the second and third quarters of 2013, and strong fourth-quarter data could lead to the fastest full-year growth since 2007 – something quite unexpected earlier in the year.
But while the central bank on Friday showed mortgage approvals in November were their highest since January 2008 — though still well below pre-crisis levels — net lending to businesses took its biggest fall since comparable figures began in May 2011. “Overall the picture from the data today remains consistent with a UK recovery that has been fairly household-led,” said David Tinsley, UK economist at French bank BNP Paribas. “We would look for that to change in 2014, but a risk remains that corporates will remain reluctant to borrow and invest.” Britain’s housing market has been bolstered by falling unemployment, low interest rates and government programs to make mortgages cheaper and easier to obtain.