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Consumer confidence hits highs - 12 March 2010

Consumer confidence hit its highest in two years in February and people were their most optimistic about the coming six months since records began, a survey showed on Wednesday.

The Nationwide Building Society’s consumer confidence index rose 6 points to 80 in February, almost double what it was a year ago and the highest since January 2008. Another index gauging people’s confidence about the present rose to its best since December 2008 at 27.

Confidence about the coming six months was its highest since the survey started in May 2004, with an index reading of 115. Nationwide chief economist Martin Gahbauer said the surge in confidence may have been a reaction to news that Britain had emerged from its deepest recession since modern records began.

However, the survey was conducted before official data showed the economy grew by 0.3 percent in the final three months of 2009, better than the 0.1 percent growth first estimated in January.

Despite their increased optimism about the economy, jobs and income, Britons became more reluctant to splash out on household goods or major purchases, with the spending index falling 4 points on the month to 93 points.

"It would seem consumers are perhaps feeling the pinch in their spending power," Gahbauer said. "We may now be seeing the effects of the withdrawal of government-driven incentives, such as the stamp duty holiday and lower VAT."

The survey was conducted between January 18 and February 15 and was based on responses from 1,000 people.

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