The latest BoE Consumer Credit data for December 2025, released on December 1st, shows a £1.12 billion increase in consumer credit outstanding. This figure is below both the market consensus of £1.35 billion and the prior month’s £1.49 billion. The data, sourced from the Sigmanomics database, covers the UK economy and reflects borrowing trends over the past month.

Drivers this month

• Slower credit growth amid rising interest rates and cost-of-living pressures.
• Household caution due to geopolitical uncertainties and inflation persistence.
• Reduced appetite for unsecured borrowing compared to the spring peak of £1.74 billion in March 2025.

Policy pulse

The current reading sits below the 12-month average of £1.31 billion, indicating a cooling in consumer credit expansion. This aligns with the Bank of England’s tightening stance, as the Monetary Policy Committee (MPC) maintains elevated base rates to combat inflation above the 2% target.

Market lens

Immediate reaction: GBP/USD slipped 0.15% in the first hour post-release, reflecting investor caution. UK 2-year gilt yields edged down 3 basis points, signaling a mild risk-off stance. Breakeven inflation rates remained steady, suggesting no immediate shift in inflation expectations.

Consumer credit growth is a vital indicator of household financial health and spending capacity. The December figure of £1.12 billion contrasts with the volatile 2025 trend, which saw a peak of £1.74 billion in March and lows near £0.86 billion in June. This volatility reflects shifting economic conditions, including inflation dynamics and monetary policy adjustments.

Monetary Policy & Financial Conditions

The Bank of England’s base rate currently stands at 5.25%, up from 4.50% at the start of 2025. Higher borrowing costs have dampened unsecured credit demand, as evidenced by the slower growth in consumer credit. Financial conditions have tightened, with credit card and personal loan rates rising by approximately 100 basis points year-to-date.

Fiscal Policy & Government Budget

Government fiscal measures remain moderately expansionary, with targeted support for low-income households. However, fiscal tightening in other areas limits disposable income growth, indirectly restraining credit uptake. The budget deficit narrowed slightly in Q3 2025, but public debt remains elevated, constraining further stimulus.

External Shocks & Geopolitical Risks

Ongoing geopolitical tensions in Eastern Europe and trade uncertainties with the EU continue to weigh on consumer confidence. Energy price volatility has also contributed to inflationary pressures, reducing real incomes and borrowing appetite.

Comparing the latest print to historical data, December’s figure is the lowest since June’s £0.86 billion, signaling a potential plateau or contraction in consumer credit growth. This trend contrasts with the robust borrowing seen in early 2025, when easing pandemic-related disruptions and pent-up demand fueled credit expansion.

Market lens

Immediate reaction: GBP/USD declined 0.15% post-release, reflecting investor caution. UK 2-year gilt yields fell 3 basis points, indicating a slight flight to safety. Inflation breakevens held steady, showing no immediate change in inflation expectations.

Looking ahead, consumer credit growth in the UK faces several headwinds and potential tailwinds. The Bank of England’s continued rate hikes could further restrain borrowing, while inflation pressures and geopolitical risks may suppress consumer confidence.

Bullish scenario (20% probability)

• Inflation eases faster than expected, allowing the BoE to pause rate hikes.
• Household incomes stabilize, supporting moderate credit growth above £1.30 billion monthly.
• Consumer confidence rebounds, boosting spending and credit demand.

Base scenario (60% probability)

• Monetary policy remains restrictive, keeping credit growth subdued around £1.10 billion monthly.
• Inflation moderates slowly, maintaining cautious household borrowing.
• Geopolitical risks persist but do not escalate significantly.

Bearish scenario (20% probability)

• Inflation surprises on the upside, forcing further BoE tightening.
• Rising unemployment and fiscal tightening reduce disposable incomes.
• Consumer credit contracts, falling below £1 billion monthly.

Overall, the outlook suggests a cautious consumer credit environment, with growth likely to remain below the 2025 average unless inflation and policy risks abate.

The December 2025 BoE Consumer Credit release underscores the challenges facing UK households amid a complex macroeconomic backdrop. The slowdown in credit growth reflects tighter monetary policy, persistent inflation, and geopolitical uncertainties. While consumer credit remains positive, the deceleration signals caution in household borrowing and spending.

For policymakers, the data reinforces the delicate balance between curbing inflation and supporting economic growth. Financial markets have responded with mild risk aversion, reflecting uncertainty about the trajectory of UK economic recovery.

Investors and analysts should monitor upcoming inflation prints, wage growth data, and fiscal policy developments closely. These will be critical in shaping consumer credit trends and broader economic momentum in 2026.

Key Markets Likely to React to BoE Consumer Credit

The BoE Consumer Credit data is a bellwether for UK household financial health and spending power. Markets sensitive to UK economic momentum and monetary policy will track this indicator closely. Here are five tradable symbols historically correlated with consumer credit trends:

• HSBA – HSBC Holdings, a major UK bank, is sensitive to consumer credit demand and interest rate changes.
• BT.A – BT Group’s consumer services revenue correlates with household spending capacity.
• GBPUSD – The British pound’s exchange rate reflects UK economic health and monetary policy expectations.
• EURGBP – Euro to pound exchange rates react to UK macroeconomic data and policy shifts.
• BTCUSD – Bitcoin’s price often moves inversely with risk sentiment tied to economic data releases.

FAQs

What is the significance of the BoE Consumer Credit report?

The report measures changes in unsecured borrowing by UK households, indicating consumer spending capacity and financial health.

How does consumer credit affect UK monetary policy?

Rising consumer credit can signal overheating demand, prompting the BoE to tighten policy; slowing credit may ease inflation pressures.

Why does consumer credit impact currency markets?

Consumer credit trends reflect economic momentum and risk sentiment, influencing investor confidence and currency valuations.

Takeaway: The December 2025 BoE Consumer Credit data signals a cautious UK consumer environment amid tightening financial conditions. Monitoring this indicator will be crucial for anticipating shifts in monetary policy and economic growth.