Net mortgage lending by banks dropped in May for the first time on record, according to industry data, though the indication of strain in the financial and household sectors was tempered by news people continued to spend in the shops.

Data from the British Bankers’ Association on the country’s six main banks show capital repayments – which have been rising steadily for three years – overtook gross lending in May, after seasonal adjustments, for the first time since the BBA started collecting data in 1997.

Ed Stansfield, a property economist at Capital Economics, said: “While we should be wary of leaping to conclusions, the data seem to add to the evidence that activity across the economy is grinding to a halt as firms and households wait for events in the eurozone to come to a head.”

This month, the Treasury and the BoE announced new measures to lower banks’ funding costs and unblock the flow of credit to the real economy. Senior executives at Lloyds said the “funding for lending” programme could reverse a previous strategy to shrink their mortgage book this year.

Separately, a retail survey suggested households had not entirely battened down the hatches. Retailers surveyed by the CBI, the business lobby organisation, reported further annual growth in sales volumes and orders in June, lifted by the Queen’s jubilee bank holiday.

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