Christmas spending is expected to rise 5.4 per cent across the UK this year with consumers predicting a total spend of £602 on gifts, socialising, food and drink, compared to £571 in 2002.

This is according to professional services firm Deloitte, in the 9th edition of their annual Christmas survey, which looks at the spending habits and underlying moods of consumers and retailers ahead of the Christmas period.

"With the end of the year looming, it appears that retailers can look forward to celebrating a profitable Christmas. The recent interest rate rise does not appear to have dampened consumers' spending spirits. Moreover, whereas consumer confidence took a hit in the run up to Christmas last year ñ as it became clear that international conflict abroad was likely ñ it is expected to be more supportive this year," said Sharon Fraser, consumer business partner at Deloitte.

"However this could be a last binge before consumers tighten their belt in the New Year, with some debt dieting to counteract Christmas excesses. Our survey showed retailer optimism on the outlook for the UK economy contrasting with consumer uncertainty - there is no clear agreement as to whether the economy will see significant growth or not," she added.

Average expected Christmas food and drink spend by region for 2003

Scotland£163

North East£144

North West£136

Yorkshire£149

Midlands£183

Wales & West£175

East Anglia£133

South East£172

South West£111

Outlook for 2004

Retailers appear slightly more optimistic than their customers about prospects for the year to come, but there is no clear agreement as to whether the economy will see significant growth next year or not. Consumers in the South East are the most optimistic region, with 29 per cent of people from this area believing that the economy will improve. The North East is home to the largest proportion of pessimists, with 44 per cent of people thinking the economy will deteriorate.

"Signs indicate that the trend to spend, spend, spend cannot continue. In the second quarter of this year, consumers borrowed more, relative to their income, than at any previous point in time. Sooner or later, they are going to have to start paying off their debt. Undoubtedly the operating environment for retailers is going to get tougher in the coming months ñ and retailers need to be taking steps to prepare for tougher times ahead," Fraser concluded.

NB. References to Deloitte are references to Deloitte & Touche LLP. Deloitte & Touche LLP is the UK's fastest growing major professional services firm based in 21 UK locations, with over 10,000 staff nationwide and fee income of £1,228 million in 2002/2003.

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