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Consumer confidence in economy is rising, says ABI

Consumer confidence in the UK economy is rising, the latest Association of British Insurers quarterly savings and protection survey reveals.

Despite the UK economy contracting 2.4 per cent in the first quarter of 2009, the ABI survey of 3,000 UK adults found marked improvement in consumer optimism.

ABI director of research and chief economist Dr Rebecca Driver says: “Thirty six per cent of consumers now expect the economic outlook to improve, more than double the number last quarter, while those expecting further deterioration has roughly halved.

“This is underpinned by a reduction in uncertainty about job prospects and increased confidence in the housing market.”

In Q1 this year 64 per cent of respondents expected the UK economy to deteriorate further.

Looking forward Driver says there are signs that the imbalance between debt and savings is likely to be exacerbated, with only 20 per cent of people expecting to pay off their mortgage debt more quickly, compared to 25 per cent in the previous quarter.

Driver says worries also remain over pensions tax relief cuts, with less than 10% knowing the cut only applies to those on incomes of over £150,000. Nearly one-third expect pension tax relief to be reduced for those on lower incomes in the future.

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