Britons hoarding cash as economic uncertainties prompt caution

An open cash register containing pound coins and notes pictured in a convenience store in London.
An open cash register containing pound coins and notes pictured in a convenience store in London.PHOTO: AFP

LONDON (BLOOMBERG) - Britons are holding onto their cash in a sign that they may be hunkering down in the face of economic uncertainties, according to the British Bankers Association.

Personal deposits grew an annual 4.8 per cent in November, data compiled by the BBA show. They increased by £32.4 billion (S$57.5 billion) in the first 11 months of the year, outstripping the £19.8 billion growth in the same period of 2015.

British investors and savers were shaken by the June decision to leave the European Union, which prompted the Bank of England to cut interest rates to a record-low 0.25 per cent. While the economy has held up well so far, most economists foresee a slowdown in 2017 as businesses seek more clarity on the nation's future relationship with the world's largest trading bloc.

"We've seen personal deposits, in particular, grow more strongly in recent months as consumers hoard cash in the absence of higher-yielding, liquid investment opportunities," BBA chief economist Rebecca Harding said. "This growth in personal deposits may also suggest that consumers are looking to grow their cash reserves against potential economic uncertainties, such as an expectation of lower wage growth."

The BBA figures also showed that approvals for home loans fell 9 per cent in November from a year earlier. In the first 11 months of the year, approvals declined 4 per cent.