UK PRIVATE SPENDING TO OUTPACE THE EC IN 2003.

(From Market - Europe)

Internal demand for the UK's goods and services is holding firm, with year-on-year gains likely to increase during 2003. It isn't hard to see why private sector consumption in the UK is outperforming the EC and most other nations of the world. Households are simply better off than they have been in recent years. They enjoy an atmosphere of low unemployment and moderate gains in real income

By the fourth quarter of 2002, unemployment was at a 27-year low. According to International Labor Organization calculations, Britain's unemployment stood at just over 5 percent, which is well below the 8.3 percent average for the eurozone. UK unemployment is not likely to rise significantly during 2003

With wage increases running in the range of 3.5 to 4 percent and the price of goods declining, consumers in the UK will find that they can afford more in 2003. Late in 2002, goods prices experienced year-on-year declines in excess of 1 percent. Price variation will move back into the positive range during the first half of 2003, yet year-on-year increases should be less than 3 percent

Household expenditure on non-durable and semi-durable goods should rise in the range of 2 to 4 percent (year-on-year) during the first half of 2003. Demand for British goods should rise slightly above that range by the end of the year, assuming that export sales improve in a climate of global economic recovery

In spite of the recent decrease in goods prices, it is unlikely that the UK will slip into recession. Demand for goods is strong enough to reverse the negative ...