Three surveys add to recovery hopes: Spending plans and credit demand up

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The Independent Online
HOPES that the UK economic recovery can be sustained receive a boost this morning from three separate surveys showing further improvements in consumer spending plans and demand for credit.

PA Cambridge Economic Consultants reports in its quarterly economic survey that plans to buy cars, brown goods and furniture have all shown a significant increase in the past three months.

More than 9 per cent of households surveyed said they planned to buy a house or flat in the next year compared with 6.6 per cent in March. Plans to buy common household goods showed a further increase.

The consultants' index of consumer confidence rose from 75.2 in March to 78.4 in its latest survey, reflecting an improvement in employment expectations partly offset by lack of confidence in the Government's handling of the economy. The survey was taken before the recent cabinet reshuffle.

According to the Finance and Leasing Association, consumer credit in April rose by 20 per cent to pounds 1.04bn.

Personal loans from the association's members jumped by 38 per cent and retail store credit also advanced, with store cards up by 6 per cent and instalment credit granted rising by 32 per cent. Loans by members for car purchases rose by 30 per cent in April, reflecting a 38 per cent jump in new car credit and a 24 per cent rise for used cars.

By contrast demand for loans from business customers remains subdued, with commercial car loans down by 7 per cent and leasing and hire purchase credit flat.

Infolink, the credit information company, said April showed year-on- year increases in demand of 9.2 per cent for new car loans and 1.2 per cent for home loans by specialist and centralised lenders.

BRUSSELS - Kenneth Clarke, who makes his first visit to Brussels as Chancellor of the Exchequer today, will battle to secure the pre-eminence of London's art auction houses, writes Sarah Lambert.

But a packed agenda for the meeting of EC finance ministers means he will not be called upon to defend Britain's plans to curb the EC's budget deficit and achieve progress on stage two of European monetary union.

Instead he will support a Danish compromise on the VAT treatment of second-hand and saleroom goods.

The ministers will also discuss attempts to modify plans for an EC-wide carbon tax.

The EC's seventh VAT directive is likely to be signed today after years of wrangling. Britain has conceded the principle that it will have to charge VAT on art imports, now zero-rated.

But a compromise suggested by the Danish presidency proposed setting the tariff at 3 per cent compared with the 5 per cent-plus charged elsewhere in the EC. Mr Clarke is expected to try to whittle that down further.