Britain’s economic problems are about to bite the Tory leadership contenders

UK Finance has just released its latest data on Britain’s credit card spending, and it makes for sobering reading. Outstanding balances on credit card accounts grew by 9.5 per cent over the 12 months to April. The number of transactions increased by 23.7 per cent. The total value increased by 28 per cent.

Now, there’s inevitably some pandemic effect in there from 2021, which distorts the year-on-year comparisons, especially with those last two numbers. But you can still file them all under “cause for concern”.

Consumers are clearly using their plastic to borrow more than they were, and they aren’t paying their balances off as quickly. That borrowing is funding subscriptions and day-to-day essentials, the price of which is inflating like the outlandish claims put about by the Tory leadership contenders.

As UK Finance was putting out its data, KPMG was publishing some survey results, which suggest that as many as a third of consumers have borrowed or dipped into savings to cover their media subscriptions.

“Media subscriptions” obviously aren’t essentials, although mobile phones (included in the survey) come close. Try living in modern Britain without one. Providers are going to rise to the top of a few hate lists when customers start to feel the impact of ruinous mid-contract price rises.

But regardless, people borrowing to pay for these monthly expenses? It’s a bad sign.

Ian West, head of technology, media and telecoms at KPMG, said: “Unfortunately, the current crisis is unlikely to disappear any time soon, and I hope that this industry adapts to support their customers in times of difficulty.”

Hope springs eternal, and it sure would be nice to have some. But beyond the likes of Disney Plus and Netflix bringing in cheaper, ad-supported subscription plans as customers cut the digital cord, there hasn’t been much sign of that.

There’s more. (I really wish there wasn’t.) But on the same day, Deliveroo warned of “increased consumer headwinds”. Corporations do so love brutalising the English language when they’ve unpleasant news to impart. What it means is that it’s bloody awful out there, and customers are spending less than Deliveroo had hoped. As such, it is cutting its growth forecasts in half.

If you’ve been around the City of London for any length of time, you’ll be aware that this sort of warning is usually followed by another, and then often by another. You can now pick Deliveroo stock up on the sale shelf, alongside the frozen pizza that’s approaching its sell-by date. But you’d probably be better off with the pizza.

All of these indicators are pointing to the same thing. The weather may be hotter than Scotch bonnet chillis, but the economy is cooling faster than one of those food store freezers it might be nice to spend some time inside on Britain’s hottest ever day.

Hey, future prime ministers, are you paying attention? Anyone listening to the candidate debates will have heard little more than “Blah, blah, tax cuts, Maggie Thatcher.”

Those unfunded tax cuts are the cigarette trees on the big rock-candy mountain dreamed up by the leadership contenders, and the public finances will be coughing up for the consequences for years if the winner of this dismal contest pushes ahead with them – unless Rishi Sunak can justify his position as favourite with the bookies.

But even Sunak still hasn’t had much to say about what’s going on in the real economy, in which real people are struggling. Perhaps that’s because a man who can don a four-hundred-quid pair of loafers is always going to be insulated from the effects of a crisis.

Britain’s economy has some serious health problems that could quickly turn into disease. What happens when credit card bills start to overwhelm consumers?

It will take a lot more than fairy dust to address the aftermath. Sober, sensible policymaking is required, and soon – preferably with at least one eye on the long term. But have you seen those Tory leadership debates? Oh dear.