UK consumer borrowing rises by most since October 2024

LONDON (Reuters) -British consumer borrowing rose at the fastest annual pace since October 2024 in August, Bank of England data showed on Monday, in a sign that household demand remains solid ahead of potential tax rises in November's budget.

Unsecured consumer borrowing in August was 7.1% higher than a year earlier, up from an annual increase of 7.0% in July and the highest since last October. In the most recent three months alone, borrowing rose at the fastest pace since March 2024.

"Nervousness about forthcoming tax rises in the Budget, in August at least, didn't put consumers off borrowing and spending," Ruth Gregory, deputy chief UK economist at Capital Economics, said.

Finance minister Rachel Reeves will present her annual budget on November 26 and many economists think she will have to find tens of billions of pounds in tax rises to keep her deficit reduction goals on track.

On a monthly basis, net consumer borrowing rose by 1.692 billion pounds ($2.27 billion) on the month - slightly higher than the 1.6 billion pounds forecast in a Reuters poll - and little changed from July's 1.669 billion pound increase.

Mortgage approvals in August were little changed at 64,680, down marginally from 65,161 in July and marginally higher than expectations in the Reuters poll.

Net mortgage lending - which tends to lag approvals by around a month - fell to 4.308 billion pounds form 4.506 billion, below a poll forecast of 4.8 billion.

Gregory said it was possible that concerns about higher taxation on the most expensive homes could dampen demand before the budget.

($1 = 0.7442 pounds)

(Reporting by David MillikenEditing by William Schomberg and Toby Chopra)

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