CONSUMER confidence is on the rise, according to a survey which reveals spending on household bills is slowing and positivity about Britain's economy is up.

The report has revealed confidence in the UK's economic situation has seen a marked improvement - up 119 points to 253 - compared to this time last year.

Spending growth on gas and electricity bills, previously a source of concern to consumers, fell from around 5% in February to around 3% in March.

Spending on food has also slowed, meaning that while prices are continuing to rise they are no longer increasing at the same pace as before.

Meanwhile, the Lloyds Bank Spending Power Report for March, showed spending on petrol and diesel is around 4% lower than a year ago, according to the report.

Patrick Foley, Chief Economist at Lloyds Bank, said: "The economic backdrop for consumers continues to improve, as ongoing growth in employment, and pay growth that finally begins to keep pace with inflation, feeds through to rising confidence.

"As pressure on consumer wallets from essential spending continues to ease, both the willingness and capacity to undertake discretionary spending is likely to rise in the months ahead."

Consumer sentiment towards the country's financial situation continues to improve, with the proportion of consumers viewing the country's financial situation as 'not good or not good at all' down from 90% in March 2013 to 71% in March 2014. The number of those stating it is 'not good at all' fell by 25% compared to this time last year.

Sentiment towards the housing market is also on the rise, although the proportion of people with a negative outlook still outweigh those who expect prices and sales to rise.

The balance of opinion for March sits at -8%, up from -11% in February and a 44% increase compared to this time last year.

Attitudes to employment have also improved, with balance of opinion between those who feel the employment situation is 'excellent, very good or somewhat good' versus 'not good or not good at all' up by 5% in March to -36%.

There are still significant regional variations, however, with people living in the north-east of England roughly four times more pessimistic about the jobs situation that those living in Greater London.

Consumers' sentiment towards their own personal finances remains relatively muted, however, with the positive balance of opinion up just 3% this month, taking it to +15%. Consumers aged between 45-54 are the only subgroup to have a negative balance of opinion towards their personal finances at -4%.

Philip Robinson, Director of Personal Current Accounts, said: "With spending growth on essential items easing overall, we are starting to see the rewards with consumer sentiment towards housing, employment, personal finance and the country's financial situation all increasing.

"This in turn should help see a steady increase in future discretionary income as we are already starting to see the rise in those able to pay off debt.

"Looking towards the next six months, we hope this swing will be even more pronounced, helping consumers to feel more in control of their finances."

The Lloyds index has coincided with the findings of the Centre for Economics and Business Research (CEBR), which has predicted that consumer spending power will rise by 1.5% this year.

The think tank also estimates that the UK economy will grow by 3.1% in 2014 and 2.2% in 2015, ahead of previous expectations.

Households are likely to see their living standards improving as earnings growth accelerates and headline inflation remains below 2% for the remainder of the year.

It also sees business investment growing by 10.1% in real terms.

However, the CEBR warned that economic growth is likely to peak this year before falling back in 2015 and 2016.