UK Consumer Confidence Rising Sharply Amid Recovery but 'too Early for Champagne'

Confidence among UK consumers is soaring as the economy recovers around them - though they are still broadly pessimistic.

Researcher Nielsen said its consumer confidence tracker had risen four times faster in the UK than the world as a whole over the year to the second quarter of 2014.

Its UK index hit 90 during the three month period, an 11 points annual increase over the year. For the world, it rose by just 3 points, though the index had reached 97. Both are below the neutral 100 mark, which means there is pessimism.

The economic recovery in the UK will see GDP grow by around 3% in 2014 according to various forecasters, such as the Bank of England and the National Institute for Economic and Social Research (NIESR). It will be the fastest growing Western economy.

But problems persist below the headline recovery. Productivity and wages growth are still far weaker than robust employment data implies. Pay is in real terms decline, as prices growth more quickly than wages.

"People in the UK are clearly more positive than they've been for some years, which is encouraging for the economy, but it's perhaps still too early to break out the champagne," said Nielsen's leader for western Europe Chris Morley.

"Overall, confidence is still in the debit column and there remains an underlying degree of caution in consumers' minds as to what lies ahead. 'Cautious positivity' would be today's summation."