The deteriorating financial situation of the consumer sector in the UK reduces households' resilience to a sharp rise in the interest rate. Consumer loans to date are the main driver of rising debt. This will probably stop or at least cause BoE to think hard before the next interest rate increase. The reason for this is that if the central bank decides to raise the interest rate quickly, the value of interest due on consumer credit will increase. The latest data on the ratio between credit growth and wages is increasing. And concerns about Brexit pose an even greater threat to the country's growth.
Source: Bloomberg Pro Terminal
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