Unsecured lending to Britain's consumers posted its sharpest drop since at least 1993 in December, official data showed on Tuesday, highlighting their reluctance to take on more debt.
Britons have been reluctant to take on more credit for major purchases, as bank lending conditions are tight and uncertainty over jobs is weighing on sentiment, making weak consumption the main drag on the fragile economy.
Consumer credit fell by 0.4 billion pounds in December, Bank of England data showed, confounding forecasts for a 0.4 billion pound rise.
Mortgage lending rose by 0.7 billion in line with forecasts.
The Bank of England said mortgage approvals numbered 52,939 in December, the highest since December 2009. However, the improvement remains slow, providing little hope for a near-term rebound in the sluggish British housing market. Analysts had forecast a reading of 53,700.
Before the 2008 financial crisis, monthly mortgage approvals ran at around 90,000, but the number of home sales has slumped since then and the property market has ceased to be a major driver of consumer spending.
The Bank's preferred gauge of money supply, M4 excluding intermediate other financial corporations, slumped by 0.7 percent on the month - the steepest decline since this data series began in July 2009 - and following a 0.5 percent drop in November.
The numbers may add to views that the central bank may have to inject more cash into the economy that is on the brink of recession. Most economists expect the Bank of England to expand its quantitative easing programme by another 50 billion pounds next week.