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Consumer confidence shows signs of recovery

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Confidence among UK consumers, although still fragile, is at its highest for some 18 months.

The Consumer Confidence Index survey, carried out by the British Retail Consortium (BRC) and market research company Nielsen, rose to 75, up from the record low of 65 registered in April.

The increase suggests that more consumers are feeling positive about job security and personal finances.

One in five people now believe that job prospects will be ‘good’ or ‘excellent’ over the next twelve months compared with 14 per cent in June and 11 per cent in April.

There is a little more optimism about personal finances too. Slightly fewer people feel that their finances are ‘not so good’ (46 per cent against 49 per cent in April), while 36 per cent of respondents described their finances as ‘good’ or ‘excellent’, an improvement from the 29 per cent in April.

Attitudes to spending also appear to be recovering, with 31 per cent of people reporting that now is a ‘good’ time to buy the things they want and need, a rise of 5 per cent on April’s figure.

However, many consumers said that they think the recession would alter their behaviour on a lasting basis. Over a half of those surveyed predicted they will still be aiming to save on such household expenditure as clothes, gas, electricity and food even when the economy returns to growth.

Stephen Robertson, the director general of the BRC, commented: “These figures suggest it will be a long, slow climb out of recession for many customers but some do now have their feet on the first rung of the ladder.

“There’s no question the general mood of customers is better than a year ago, when conditions were dire, but improvement has been slow so far. Half of consumers believe we’ll still be in recession in a year’s time. More than half are worried about jobs and their own finances, and that will hold back full scale retail recovery well into next year.”

Justin Sargent, managing director at Nielsen, added: “It seems that consumers have implemented a number of strategies to stay within their budgets and they intend to persist with some of these even when times become easier. This foray into a more frugal way of life for some may well turn out to be something that shapes lifestyles for many years to come.”