THE pace of growth of unsecured consumer credit in the UK accelerated in January, in spite of a further drop in retail sales on the official measure, figures from the British Bankers’ Association show.

Lending to non-financial businesses by the big UK banks rose by a net £3.36 billion in January, having fallen in each of the previous two months.

However, the BBA said: “The borrowing was largely short-term and will probably unwind next month.”

Unsecured consumer credit rose by a net £538 million on a seasonally-adjusted basis in January, taking into account repayments, following an increase of £249m December.

Personal loans and overdrafts increased by a net £422m in January, after rising by £249m the previous month. The amount outstanding on credit cards rose by £116m in January, still a relatively modest increase by recent standards, having been flat in December.

Howard Archer, chief UK economist at IHS Markit, said: “January’s rise in unsecured credit will likely be of some concern to the Bank of England. In a speech in mid-January, Governor Mark Carney indicated the Bank of England will closely monitor consumer dynamics over the coming months.”

He added: “The suspicion is that businesses will become increasingly cautious in their behaviour, especially investment...due to mounting concerns and uncertainty over the economic outlook as the UK’s Brexit process gets under way and consumer spending falters.”

UK business investment tumbled by one per cent during the fourth quarter.