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Thursday, May 20, 1999 Published at 07:39 GMT 08:39 UK

Business: The Economy

Feelgood factor soothes UK consumers

Shop spending is up - but not quite back to these levels

UK consumer confidence has risen to its highest level in a year.

After the crisis of confidence last year, May's ratings show shoppers are now feeling far more upbeat.

In its latest monthly report, GfK said its consumer confidence barometer for the month rose as did the financial expectations of households for the next year.

After a fifth successive improvement in mood, optimists about future economic growth now outnumber pessimists by 27% to 23%.

This is the first time since June that optimists have outweighed the pessimists.

Seasonal pick up

Nonetheless, GfK noted that the improvement in sentiment, while "undoubtedly significant", was no surprise as consumers are prone to a seasonal affect which has seen confidence rise from April to May in each of the 18 years the survey has run.

It also attributed the rise in confidence as a delayed reaction to the income tax cuts announced in the March budget, which had failed to make an impact on sentiment last month.

It said the tax cuts, together with the interest rate reductions, have led to 36% of respondents, 4% more than in April, believing that now is a good time to make major purchases.

The research was carried out by GfK Great Britain on behalf of the European Commission.

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