We've stopped spending, says Bank

The great consumer borrowing binge is over, according to Bank of England figures today showing the biggest drop in mortgage and credit card borrowing for two years.

The news, which comes after figures showing the high street spending boom has fizzled out, will mean the Bank's monetary policy committee (MPC) is likely to keep interest rates at a 38-year low of four per cent when it meets this week.

Plunging stock markets and cooling house prices also mean homeowners will continue to enjoy low interest rates, with some economists speculating the next move in rates could be down.

The figures from the Bank, released three days before the MPC sets the cost of borrowing, showed total net lending rose by £6.9billion in June, a 16 per cent drop on May's record £8.2billion and the biggest decline in percentage terms since July 2000.

Within this, mortgage lending rose by £5.6 billion against £6.8 billion the previous month. Today, the FTSE 100 index of leading shares made further gains, climbing 100.5 points to 4117.1.