March 3 (Bloomberg) -- U.K. consumer confidence jumped in February to a two-year high after the economy exited its worst recession on record, Nationwide Building Society said.
The index of sentiment increased six points from the previous month to 80, the customer-owned lender said in an e- mailed statement today. A gauge measuring confidence in the economy in six months’ time rose to the highest since records began in 2004.
“Consumer confidence is crucial to a strong and sustainable recovery and while confidence is likely to remain fragile for some months to come, the early signs do look positive,” Martin Gahbauer, chief economist at Nationwide, said in the statement. “A strong influencing factor behind this uplift is likely to be the news that the U.K. has come out of its longest recession on record.”
Weeks away from the election, Prime Minister Gordon Brown’s Labour government is narrowing the gap with the Conservatives in the fight to convince voters he is best placed to drive Britain’s recovery. The U.K. economy expanded 0.3 percent in the final three months of 2009, more than previously estimated, ending six quarters of contraction.
The gauge of Britons’ confidence in the present economic situation rose 4 points to 27, the highest since December 2008, Nationwide said. The measure of confidence in the economy in six months’ time climbed 6 points to 115, while the index of whether now is a good time to spend fell 4 points to 93. TNS-RI Research questioned 1,000 people for Nationwide from Jan. 18 to Feb. 15.
Poll Lead
The Conservatives’ lead over Labour narrowed to 5 percentage points in a ComRes Ltd. poll published on March 1, which would put Britain on track for its first minority government since 1974. The election must be held by June.
The economy’s recovery may help keep a lid on unemployment. A separate report today by KPMG and the Recruitment and Employment Federation showed that a measure of hiring for permanent jobs grew in February at the fastest pace since July 2007, rising to 63.2 from 60.5 in January. A reading above 50 indicates an increase in hiring.
Price pressures may also be abating after the inflation rate jumped to a 14-month high in January. A British Retail Consortium survey released today showed prices of goods in U.K. shops rose 1.7 percent in February from a year earlier after a 2.3 percent increase the previous month. Food prices climbed an annual 1.3 percent, while non-food prices increased 1.9 percent.
To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.
