BORROWING by consumers has grown at its slowest pace in nearly four years, adding to widespread expectations that the Bank of England will cut interest rates next week.

Unsecured lending, which includes borrowing on credit cards, rose £1.3 billion last month, lower than May’s rise of £2 billion. Lending increased by 12.5 per cent — the lowest annual growth rate since August 2001, according to the Bank. Analysts said that consumers’ appetite for debt had softened, adding to the case for lower interest rates to stop the retail slowdown worsening.

That picture was offset by a leading measure of confidence and new data on shopper numbers. The figures point to an unexpected level of robustness in consumer sentiment over the past month.

The European Commission’s measure of British consumers’ confidence rose to minus 1 this month from minus 3 last month. The survey period, from June 29 to July 18, included the July 7 terrorist attacks in London but not the the failed second wave. The figures appeared to contradict expectations that the bombings would worsen consumer confidence.

Figures from FootFall, the shopper-tracking agency, suggested that overall spending levels were not dented by the attacks. The number of shoppers in Central London fell by 6.5 per cent this week compared with last week, and by 7 per cent compared with the same period a year before. However, this fall was counter-balanced by a 15.6 per cent rise in outer London.

The Bank also revealed that mortgage lending stabilised in June. The number of new mortgage approvals was unchanged at 96,000, while the value of new mortgage lending rose by £7.5 billion, below expectations.

Ross Walker, of RBS Financial Markets, said: “Although the (consumer and property lending) data are running well below the ‘boom’ levels of 12 to 18 months ago, they remain broadly in line with long-run averages.”

But Ed Stansfield, of Capital Economics, said the approvals figures were a sign that the recent recovery in mortgage demand had come to an end. Even if interest rates were lowered, first-time home buyers would still have difficulty raising deposits, he added.