* The last few years have been tough for UK consumers.

* Consumer spending fell by 6.6% between late 2007 and early 2009 – the biggest consumer recession since the 1930s. Since then spending has seen a weak and choppy recovery, one that has left UK consumers spending 4% less than they were in 2007.

* With consumer expenditure accounting for over 60% of the economy a weak consumer has been a major drag on the wider economy.

* But the relationship between the consumer and the rest of the economy has changed. Last year as the economy dipped back into recession the consumer sector returned to growth.

* Expenditure has risen for three quarters in a row, the first time this has happened since before the crash. In 2012 the UK economy saw no growth while consumer spending rose slightly, by 0.8%. Car sales rose by 5.5% last year. Unemployment fell and more jobs were created in the private sector than were lost in the public sector. Much of the job growth has been in part time work, self employment and government schemes, but the number of full time jobs increased too.

* This is all a long way from the roaring consumer spending of the '90s and early '00s. On average economists expect UK consumer spending to increase by 0.9% in 2013, just a quarter the rate that was the norm before the Global Financial Crisis.

* But while the outlook is hardly rosy, but there are reasons for thinking that the worst has passed for the UK consumer.

* The big tax rises and high inflation of the last 4 years are behind us. 70% of the Coalition's planned tax rises have already taken affect. Inflation has more than halved since its peak in 2011 and is widely expected to continue declining. With average earnings forecast to pick up the scene looks set for some, modest strengthening in consumer spending power this year.

* Consumer wealth has been bolstered by rising equity markets. Comparing consumers' debts to their financial assets – mainly pensions, equities, unit trusts and cash - balance sheets are in better shape than at any time in the last ten years. Falling levels of mortgage arrears and write-offs of consumer credit fit with a picture of a healthier consumer sector.

* There are signs, too, that the long credit freeze may be starting to thaw. The Bank of England's latest Credit Conditions Survey found that mortgage availability in the fourth quarter improved at the fastest rate since early 2008. Banks who responded to the survey said that the Government's Funding for Lending Scheme had been an important factor behind the improvement.

* Easier credit conditions should lend support to house prices and housing activity. The government's independent forecaster, the Office of Budget Responsibility, is forecasting a 2.7% rise in house prices in 2013/14 and a remarkable 20% increase in housing transactions. Investors certainly see better times ahead for the UK house building industry. The FTSE house builders' index has risen by almost 50% in the last 6 months.

* (Whether rising house prices are a "good thing" is, of course, a moot point. According to the Economist UK housing is still 12-20% overvalued. Further price increases enrich existing home owners making it harder for first time buyers to get on to the housing ladder).

* But the consumer faces a long haul. The factors which fuelled the strong consumer spending of the '90s and '00s - steady economic growth, ultra low inflation, cheap and plentiful credit and soaring house prices – are unlikely to return soon.

* The Office of Budget Responsibility thinks it will take another five years, till 2017, for UK consumers to be spending at the levels they were in 2007.

* But better news on consumer incomes, wealth and credit supply suggest things are, at last, moving in the right direction.

MARKETS & NEWS

UK's FTSE 100 ended the week up 2.1%, reaching a new four-and-a-half year high.

Here are some recent news stories that caught our eye as reflecting key economic themes:

KEY THEMES

* The UK economy shrank by a faster-than-expected 0.3% in Q3 2012 according to preliminary estimates from the Office for National Statistics – slowdown

* UK unemployment fell by 37,000 to 2.49m in the 3 months to November, its lowest level for 18 months – unemployment

* The UK government proposes to allow developers to convert offices into residential flats without seeking local authority approval – planning laws

* The chief economist of the International Monetary Fund (IMF) Olivier Blanchard suggested that the UK government should consider "a reassessment of fiscal policy" in light of weak growth – austerity effects

* The IMF cut its forecast for global growth in 2013 to 3.5% from a previous estimate of 3.6%, driven by downgrades to European growth forecasts – slowdown

* The French foreign minister Laurent Fabius said "[i]f the UK decides to leave the EU, we will roll out the red carpet to businessmen" – EU politics

* European Central Bank president Mario Draghi said that he foresees "a [eurozone] recovery in the second half of the year" – euro crisis politics

* Goldman Sachs chief executive Lloyd Blankfein suggested that "the moment of crisis is over" in terms of the global economy – market sentiment

* The regional government of Madrid successfully sold €1bn of debt, representing the largest ever single debt auction by a Spanish region – Spain

* Data from Dealgoic shows that lenders sold $39.5bn in bonds backed by US credit card debt in 2012, a rise of 165% since 2011, driven by a sharp fall in consumer bankruptcy rates – asset backed securities

* The United States House of Representatives approved legislation that suspends the requirement for Congress to approve a higher limit on America's borrowing for another 4 months  - US debt-ceiling

* Japan recorded a record annual trade deficit of Y6.9tn, driven by the seventh consecutive monthly drop in exports in December – Japan

* The Bank of Japan (BOJ) agreed to meet demands from Japan's new government and to double its inflation target to 2% and further ease monetary policy – Japanese stimulus

* Chicago Mayor Rahm Emmanuel urged the chief executives of two major banks to stop financing companies "that profit from gun violence" – regulation

* A US company called Deep Space Industries unveiled plans to launch a fleet of 'prospecting satellites' to locate asteroids flying close to Earth that can be mined for minerals and resources – commodities

* A German court ruled that people have the right to claim compensation from service providers if their internet access is disrupted, because the Internet is an "essential" part of life – right to surf

* A Canadian botanist has noticed that the maple leaf on the Bank of Canada's new $20, $50 and $100 bills is a Norwegian species and not the North American sugar maple that the country has on its national flag – bad note

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