Consumers are feeling the most optimistic about the economy since November 2010, according to Lloyds TSB.
The firm's spending power report questioned over 2,000 consumers and found greater optimism and improved sentiment.
Confidence is now at 112 points, up 10 points from the end of 2012 and up 22 points from the historic low of 90 in March 2011.
Consumers are more confident about the general economy, the housing market and annual spending growth has stabilised.
There was no change in consumer sentiment towards personal finances with 54 per cent stating they were 'excellent' 'very good' or 'somewhat good'. This increased to 60 per cent of those in the 25-34 age group and fell to 46 per cent in the 45-54 age group.
{desktop}{/desktop}{mobile}{/mobile}
Only 39 per cent of people thought the UK economy was 'not at all good', down from 47 per cent in March.
Optimism towards their own finances reached a record high with 66 per cent of people saying they will save more if they have money left over at the end of the month.
However, 69 per cent said they were spending more on utility bills and 74 per cent were concerned about the rising cost of food and drink.
Patrick Foley, chief economist at Lloyds TSB, said: "As the outlook for the UK economy gradually improves, firming consumer confidence remains vital to a self-sustaining recovery. More positive sentiment is therefore good news and supported by greater stability in households' essential spending, should embolden consumers still further."

• Want to receive a free weekly summary of the best news stories from our website? Just go to home page and submit your name and email address. If you are already logged in you will need to log out to see the e-newsletter sign up. You can then log in again.