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Is the economic recovery starting to fuel consumer confidence?

POSTED: 11th February 2014
IN: General
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Recent months have brought plenty of good news regarding the economic situation in the UK.

Recent months have brought plenty of good news regarding the economic situation in the UK.

The Office for National Statistics announced that gross domestic product increased by 0.7 per cent in the fourth quarter of 2013, meaning the economy achieved consistent growth for the entire year.

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Unemployment, meanwhile, has been on a steady downward trend for nearly a year, according to the most recent figures, with the jobless total falling from 2.56 million in January 2013 to 2.32 million in November.

It appears that these encouraging developments are starting to feed through to the attitudes of the British public, with research firm GfK's UK Consumer Confidence Index rising six points to -7 in January 2014.

All five measures used to calculate the score picked up during the month. The index covering changes in personal finances climbed four points to -12, marking a 12-point jump from a year earlier.

The forecast for personal finances for the coming year rose six points to +3, ten points higher than a year ago.

GfK also published an index gauging consumers' savings outlook, which increased four points in January to -9. The 'climate for major purchases' index was up seven points to -10.

The most substantial year-on-year improvements in attitude were recorded in the section of the research covering the general economic situation.

Expectations for the economy in the next 12 months rose six per cent during the month to +2, which is 27 points higher than in January last year.

Nick Moon, managing director of social research at GfK, said: "After three consecutive one-point falls in the index, January saw a dramatic return to the rapid improvement seen last summer, with a six-point rise.

"This more than cancels out the recent falls and means that in the nine months since last April the index has risen by a massive 20 points. This is only the third time in the 40 years of the index that there has been such a nine-month shift."

In its latest Consumer Tracker report, Deloitte indicated that consumer confidence dipped slightly in the fourth quarter of 2013.

However, the professional services firm said this is likely to be a temporary setback, with the improving economy expected to lift real incomes in 2014.

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