Green shoots finally appear as consumer confidence increases

Paul Waugh12 April 2012

Hopes that Britain may be emerging from the worst of the recession were boosted today as a new poll showed the public is more optimistic than at any time since the credit crunch began.

Consumer confidence rose for the third month in a row and shoppers are now more bullish about the recovery than at any time since August 2007, when Northern Rock collapsed.

The GfK NOP poll found that the index measuring overall consumer expectations was still negative, at -15, but had jumped 16 points since last month.

The monthly snapshot of opinion suggests that despite the dire projections to emerge from the Budget, a combination of cheaper mortgages, low inflation and tax cuts are improving the spending power for those in work.

The Treasury and Downing Street will be heartened by the figures, which offer a glimmer of hope that an economic recovery may be under way in time for the general election next spring.

Unemployment is still set to rise, but for those in City jobs there was a further sign that they are riding out the downturn. Separate figures showed bonuses in the Square Mile and Canary Wharf have come close to £7  billion — less than half that of a year ago, but big enough to trigger criticism.

The Government has been battered in recent weeks by dismal figures on jobs, housing and growth.

But with the FTSE at its highest since February, the GfK NOP poll points to tentative green shoots in the economy. Britain will depend heavily on US recovery and last night America's central bank, the Federal Reserve, suggested the worst recession of the post-war era may be past its nadir. It predicted "a gradual resumption of sustainable economic growth".

The Chancellor continues to point to evidence that Britain is not suffering as badly as other economies. Berlin announced yesterday Germany's economy will contract this year by six per cent, far worse than the 3.5 per cent contraction projected for Britain. Alistair Darling told the Commons he was confident that his fiscal stimulus was "having an effect".

The Gfk NOP consumer confidence index, carried out on behalf of the European commission, also showed voters were less gloomy about the state of their own personal finances, on which the index rose from -6 to -3.

Rachael Joy, of Gfk NOP, said: "Significantly, this is the third consecutive month we have seen a rise in the index, suggesting a definite upward trend.

"This could be down to a combination of the simple belief things are improving, as well as the feelgood factor of improving weather following the Easter bank holiday."

Analysis of preliminary pay data from the Office for National Statistics for the five months of the City bonus season to April suggests payouts will be between £6.5 billion and £7 billion, compared with £13.7 billion last year.

Lib-Dem Treasury spokesman Vince Cable said: "These figures are alarming and show a complete lack of awareness in the City of the extent of the crisis, their role in creating it and the extent to which they are ultimately answerable to the taxpayer."

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