* 21 percent "comfortable and confident" -- survey
* Mortgage repayments drop for some homeowners
* Retailers compete on prices to attract shoppers
By Michael Holden
LONDON, Feb 25 (Reuters) - Beyond store closures, shortened factory hours and longer lines of job-seekers in Britain is a reality that doesn't make front pages: a significant number of people are doing well out of efforts to stimulate the economy.
Falling prices and negligible interest rates are supporting consumption and borrowing, and discouraging saving: it's the opposite of what experts say the economy needs in the long term, but their confidence may lift the short-term mood.
Lower mortgage repayments for those homeowners whose loans track falling interest rates, and a falling cost of living as retailers compete on price are among factors prompting more than one in five people to say they felt positive in a survey last month by market research firm Mintel.
"It cannot be ignored that 21 percent are 'comfortable and confident' and do not feel that their finances have really been badly affected by the worsening economy," said Toby Clark, head of Mintel's Financial Research.
"For most, the economic downturn has been fairly manageable. Some will even be feeling better off, with more money to spend as inflation falls and interest rates reach a new low."
Self-employed driving instructor Bill Lord is one example. A 60-year old who works in Bromley, southeast of London, he says he has seen his standard of living rise.
His mortgage repayments have tracked interest rates down, other bills have fallen and, with auto retailers struggling to attract customers, he has been able to negotiate good terms with car dealers for the vehicles he needs for his business.
"Every recession is different ... but it looks very healthy from our point of view," he told Reuters by phone from his busy office.
The Bank of England has cut interest rates to a record low of 1 percent, leading to a significant drop in mortgage repayments for some home owners.
Prime Minister Gordon Brown has cut Value Added Tax, a sales tax, by 2.5 percent. Although criticised -- notably by French President Nicolas Sarkozy who scoffed at the cut as achieving "absolutely nothing" -- it has cut prices in shops.
With the British economy forecast to contract by as much as 3.3 percent this year and unemployment to reach almost 3 million in 2010, according to the Confederation of British Industry, those who are still spending are not a meaningless minority.
"There will be a significant number of households in the UK who will benefit from the current economic conditions," Philip Shaw, chief UK economist at Investec, told Reuters.
"There are big losers -- namely people who have lost their jobs and also those people who are dependent on some sort of variable rate savings income -- but there are also big winners."
"BEST MOVE I MADE"
Driving instructor Lord said work was booming as those seeking jobs saw a driving licence as an easy qualification to help find employment: "I came into this industry 20 years ago because there was a recession on and I lost my job. It's done well for me, it's the best move I ever made."
He is expecting his income to increase by 20 percent over the year, while the main school he works with is looking to take on 15 more instructors in addition to the 90 it already employs.
One concern expressed by retailers and commentators is that negative reports in the media would damage consumer confidence and hold back spending, aggravating the recession.
Lord said he did not plan any belt tightening.
"I'm certainly not going to start cancelling holidays. Money is for spending -- it's not for sticking in the bank."
Manufacturing and financial services have suffered from the credit crunch, but many, such as those with secure public sector jobs, still feel less likely to be hit.
"Workwise and personally I have not been affected," civil engineer John Smythe, 53, told Reuters while working on a major improvement project for construction company Balfour Beatty at London's Blackfriars railway station.
"I've been through recessions before in civil engineering. There is always a 'Plan B' by the government which will provide funding for our long-term projects."
Far from being encouraged to pay back debt, Shaw said Britons with large mortgages would particularly benefit as the standard variable interest rate for repayments has dropped to about 4.25 percent from 7 percent last year.
That could make someone with a mortgage of 100,000 pounds ($142,200) 167 pounds a month better off.
"Providing you have a job, you have a variable interest rate mortgage and you are an energy consumer, then your purchasing power will increase perceptively compared with 2008," he said.
UNTHINKABLE OPPORTUNITIES
For some, including about 40 percent of borrowers who, according to the Council of Mortgage Lenders, have loans that track rates in the broader economy, this has provided opportunities that had been unthinkable.
Mark Osland, an independent financial adviser, said one client had discussed with him the option of quitting work because her family was better off now.
"In her particular case, the mortgage has come down so much they could consider the lady actually giving up work to spend time with her children," he said.
With more cash to spend and savings rates offering little incentive for people to put money aside, businesses as well as individuals could eventually see the benefits.
Both the government and Bank of England, which have for years tried to persuade Britons to save for their retirement, now say spending is more important.
"This is the paradox of policy at present -- almost any policy measure that is desirable now appears diametrically opposite to the direction in which we need to go in the long term," BoE Governor Mervyn King said in a speech last month.
"Spending now supports the economy, but in the long run we need to save more and borrow less."
For driving instructor Lord, the only downside of the recession so far has been a sense of guilt.
"You always feel a little bit ashamed here because we're dealing with a lot of people who have lost their jobs, he said. "But every cloud has a silver lining." (Additional reporting by Martina Fuchs; editing by Sara Ledwith and Andrew Dobbie)