UK borrowing remains timid with debt repayments far outstripping new loans, new figures show.

Companies, as well as householders, are continuing to be risk averse, according to the British Bankers’ Association.

The association revealed this week that outstanding debt on consumer overdrafts and personal loans fell to £52 billion - its lowest for 10 years.

The figures suggested that people were using existing funds to cover essential payments, rather than borrowing more.

Lending to financial companies was outstripped by repayments again in July, and debt repayment matched new borrowing in the non-financial companies sector.

Steve Ellwood, head of food and agriculture at accountant Smith & Williamson, told FPJ: “The general direction is one where cash flow is being used to pay down debt rather than create expense.

“The general mindset of the economy overrides the individual sector so as long as consumers are wary new loans are unlikely.”

Ellwood said the main movement in the market is in consolidation of supply chains. “There is a real desire for the retailers to have a significant foot in production as well. The guys that are driving consolidation can pin themselves to production. Both production and supply are more secure under that arrangement,” he said.

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