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Tuesday, 1 January, 2002, 11:12 GMT
UK confidence outstrips eurozone
Oxford Street shoppers
Post-Christmas sales in London: Consumers still buoyant.
UK consumers are heading into the new year in a more confident mood than their counterparts in France and Germany, according to a survey from the UK's largest mortgage lender Halifax HBOS.

The survey reinforces predictions that economic expansion in the UK, fuelled largely by consumer spending, will outstrip growth in the major eurozone countries in 2002 for the second year running.

Sixty-three percent of UK consumers expect that the economy will improve in 2002, compared with 58% of Germans and 57% of French respondents, Halifax said.

And just 10% of UK consumers expect their standard of living to fall this year, against 20% of French and Germans.

Optimism

"Even though the UK will not be part of the eurozone, it is the British who are the most optimistic about general economic improvements during 2002," said Halifax HBOS spokesman Mark Hemingway.

But consumer confidence in mainland Europe may be on the verge of a recovery.

On Monday, the European Commission said that its monthly consumer optimism index rose to its highest level in three months in December.

The EC survey showed that consumers in the European Union are more confident about the economy as a whole than at any time since July.

Warning signs

And there remain a few dark clouds on the horizon for British consumers.

The Halifax survey showed that just 41% of UK consumers believe their job prospects will remain stable this year, compared with 61% of Germans and 42% of French consumers.

Economists have warned that a rise in unemployment would choke off the strong consumer spending that has helped the UK to stave off a full-blown recession last year.

Think-tank the Centre for Economics and Business Research on Tuesday said it expected consumer spending to fall early in 2002, with increased business investment taking up the slack.

But the CEBR warned that with the UK continuing to import far more than it exports, the pound may fall sharply against the euro and the dollar, forcing the Bank of England to raise interest rates in order to control inflation.

The sudden increase in borrowing costs "could push the economy over from trend growth into recession," said CEBR chief economist Douglas McWilliams.

See also:

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Consumer credit boom continues
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