German shoppers are showing surprising strength in adversity with consumer confidence in the eurozone’s largest economy hitting its highest level for more than a year, even as evidence mounts of a credit squeeze across continental Europe.

The Nuremberg-based GfK research group has forecast its “consumer climate” index will rise from 3.0 points in July to 3.5 points in August, the highest since June last year. Even as the country battles against the worst recession in post war history, the disappearance of inflation and the lack of a dramatic shake-out in the labour force were boosting Germans’ propensity to spend, it said.