Bank of England ‘keeping close eye on UK consumer spending’

London, Jan 17 (IANS) The Bank of England is keeping a close watch on Britain’s consumer spending amid signs of households dipping into their savings and amassing debts to keep spending in the face of rising inflation, media reports said.

“At present, households appear to be entirely looking through Brexit-related uncertainties. The saving rate has fallen towards its pre-crisis lows, and consumer borrowing has accelerated notably,” Carney said on Monday.

Governor of the bank, Mark Carney said consumer spending had held up since last summer’s vote to leave the EU but he reiterated a warning that living costs were likely to rise on the back of a weak pound and squeeze households’ real incomes, the Guardian reported.

He reiterated that the pound’s fall since the EU referendum, pushes up the cost of imports and that is passed onto consumers as higher prices.

Carney pointed to lessons from recent history that such growth tended to be both “slower and less durable”.

“This is because consumption growth eventually outpaces earnings growth, increasing debt and making demand more sensitive to changes in employment and income,” he said.

–IANS

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