Charts by Subject

Chart of the Week

Friday
Jan062012

Week 1, 2012: Net Lending to Individuals

Summary: Statistics released by the Bank of England this week show that net lending to individuals grew by £1bn in November 2011 - the 6th consecutive month of growth by at least £1bn. Net lending is a fair indicator of consumer spending, so bodes well for short term growth.

What does the chart show? The chart shows the net change on the previous month of credit extended to individuals by all financial institutions, in billions of pounds.

Why is the chart interesting? Consumer spending is a crucial element of economic growth. As net lending increases, individuals will have more disposable income (in the short term at least), possibly leading to higher spending. It is therefore theoretically a good sign that lending was increasing at the end of last year.

Having said that, net lending has been increasing since September 2009, throughout a period of pretty dismal growth numbers, so perhaps the possible effects on growth for the final quarter of 2011 should be played down.