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Spending is brisk but clouds appear on horizon

Swiss consumer spending continues to develop healthily but prospects are looking increasingly gloomy, according to Switzerland's largest bank UBS.

The monthly consumption indicator rose slightly in September after declines in July and August.

UBS said on Tuesday that the situation on the labour market was still encouraging and was likely to have a positive impact on expected household income. This, it said, gave cause for optimism.

But it commented that the continuing high level of inflation coupled with deteriorating economic prospects "tarnished" the outlook.

The bank expects overall real private consumption to grow 1.9 per cent this year.

The consumption indicator is calculated from a number of factors, including new car sales, business activity in the retail sector, the number of domestic hotel overnight stays by Swiss nationals, a consumer sentiment index and credit card transactions via UBS at points of sales in Switzerland.