Bank of England governor Mark Carney issues stark warning on household debt
He also says Britain's future financial stability ‘remains challenging’
THE GOVERNOR of the Bank of England has given a stark warning about the high level of UK household debt.
Mark Carney said consumers were borrowing more as figures show credit card lending is at a record level, up by £571m in the last month.
Overall unsecured debt - which includes overdrafts - is rising at its fastest pace for 11 years.
"We are going to remain vigilant around the issue, because we have seen this shift," he told a press conference at the Bank.
EU economies also need to prevent Brexit damaging the City of London said Carney as he dubbed it the "investment banker for Europe".
But the Bank of England governor said Britain's future financial stability “remains challenging”, after calling for and an “orderly exit”
In its Financial Stability Report the Bank said that as a result of the June 23 vote, risk to financial stability "remains elevated".
The report said: "It will take time to clarify the UK's new relationships with the European Union and the rest of the world as well as for the UK economy to adjust to these changes.
"The orderliness of the adjustment will influence the risk to financial stability."
Mr Carney said clarity on the details of Brexit would help an orderly transition and that it is important British businesses know "as much as possible, as early as possible".
He adding that it is in the EU's interests that Brexit damage to Britain's banking sector is minimal, saying: "These activities are crucial for firms in the European Union economy, and it's absolutely in the interest of the European Union that there is an orderly transition and that there's continual access to those services," he said.
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His comments come as the financial services sector frets over whether it will continue to have access to the bank passporting system.
Banks and financial firms wanting to trade with a country in the European Economic Area (EEA) must apply for a passport, which allows them to sell their products to any country within the EEA.
The Bank added: "Changes to the trading relationship between the United Kingdom and the European Union may require firms to alter their operations and the services they provide.
"If any such adjustments take place in a short time-frame, there could be a greater risk of disruption to services provided to the European real economy, which could spill back to the UK economy through trade and financial linkages."
The report also said Donald Trump's US election victory earlier this month had "reinforced existing vulnerabilities", flagged the potential for weaker global trade and spoke about heavy debt in emerging market economies.
But despite the fall in sterling, a reduction in commercial property prices and indications of reduced investment into the UK, the Bank said economic activity and business sentiment have recovered from "low points" immediately after the referendum and are "materially stronger than had been expected in July".