Hopes lifted for strong recovery in second half

HOPES that economic recovery will remain strong in the second half of the year were boosted yesterday by figures showing a rise in consumer confidence last month and a large drop in company and personal bankruptcies in the second quarter of the year.

Consumer confidence appeared to be lifted by growing hopes that unemployment is established on a sustainable downward trend, according to the latest survey carried out by Gallup for the European Commission. Some 34 per cent of consumers said they expected the economy to improve in the coming year, compared with 28 per cent who thought things would get worse. Last month the pessimists outnumbered the optimists.

The number of people who believe now would be a good time to make a large purchase also rose sharply last month, although the number expecting their financial circumstances to improve in the coming year was little changed. This may reflect the belief that pay settlements are unlikely to take off as recovery gathers strength.

Allan Hyde, of Gallup, said the figures were 'a very positive indication that confidence may be returning'. But he added that government problems or bad economic news could quickly see the gloom return.

One reason why people are becoming less afraid of rising unemployment may be the slowdown in company collapses. Company liquidations fell by more than 10 per cent and personal bankruptcies by more than 20 per cent in the second quarter of this year, according to figures published yesterday by KPMG Peat Marwick, the accountants.

In the quarter to the end of June, there were 5,265 liquidations, compared with 5,881 in the first quarter, while the number of bankruptcies fell from 9,435 in the first period to 7,403.

Tim Hayward, the firm's head of corporate recovery, pointed out that a drop in the number of business failures this time last year had been followed by two successive quarters of rising levels of collapses. 'The level of insolvencies is still too high to indicate that the recession is ending, but it does at least confirm that it is easing rather than worsening,' he said.

The South-east remained the hardest hit, accounting for 58 per cent of the total number of creditors' voluntary liquidations. The Midlands saw the largest decrease in the number of such liquidations. The South-west and South Wales also registered falls.