Confidence higher despite tax rises

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CONSUMERS appear to have taken last month's tax increases in their stride, with Gallup's latest monthly confidence survey for the European Commission showing a sharp improvement on April.

The survey was published as figures from the Central Statistical Office showed Britain's trade gap with countries outside the European Union falling to its lowest since October. Imports exceeded exports by pounds 566m in April, down from pounds 686m in March. But excluding oil and erratic items the deficit was almost unchanged from the previous two months.

The markets were more interested in remarks by Hans Tietmeyer, the Bundesbank president, that the German central banks was 'not following a step by step cut in interest rates for the time being', suggesting no prospect of an early further cut in official interest rates. This hit German bonds and the US dollar.

Wall Street was also unnerved by continued strong advances in commodity prices, including a surge in copper futures. The Dow Jones Industrial Average was trading at 3,728.59, down 37.76 points, by mid-afternoon.

Pessimism about the economy and household financial circumstances has abated significantly in the past month, according to the Gallup survey. A net 22 per cent of consumers expect their finances to worsen in the coming year, down from 30 per cent in April.

The net balance expecting the economy to deteriorate in the next year has more than halved, with respondents less worried about inflation and unemployment.

There was little to frighten consumers in April's non-EU trade figures. Excluding oil and erratic items, the deficit was pounds 686m, compared with pounds 690m in each of the two previous months.

Trade Indemnity, the credit insurer, said 1994 had begun with convincing growth in orders and output but late payment remained a problem. The average value of long overdue debt reached record levels in the first quarter.

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