British pubs and brewery group Greene King reported higher half-year profits, benefiting from an upturn in trading as hard-pressed consumers struggling to cope with economic pressures seek solace in their local pubs.

The 212-year-old Suffolk based firm, which has 2,410 pubs, said the consumer environment remained challenging with cost inflation rising ahead of wage inflation and discretionary spending being squeezed.

In this environment, the on-trade drinking out and eating out markets are performing well, delivering an 'everyday indulgence' to the UK consumer, the company said on Thursday.

Britain's pub sector is providing a rare bright spot among the economic gloom, with Marston's, Mitchells & Butlers, Young's and Fuller's reporting rising sales and profits.

Greene King's Chief Executive Rooney Anand said he expected economic conditions to remain tough through 2012 but believes well-run pubs can pick up trade as consumers allow themselves a relatively inexpensive treat.

What we've seen throughout the course of the recession is the ability of the consumer to reserve time out and cash for those little treats that we provide, Anand said on a conference call with reporters.

He added that Greene King, whose chains include Hungry Horse, Old English Inns and Bellhaven, had benefited from being positioned largely outside city centres.

A quick way of saving money is to say I'm not going into town on a Friday or a Saturday night with the obvious outlay and the extra cost of transport, he said.

Pubs are benefiting from increasing demand for casual dining as customers trade down from eating out at restaurants.

The premium casual dining market will only continue to grow as people look for ways of rewarding themselves without going to expensive restaurants, Anand said. When you walk across the threshold of a pub you instantly relax and take the view that you've taken the smart decision in terms of spending.

Anand said he expected economic conditions in Britain to remain tough in 2012.

There'll be the twin impact of both continuing if not worsening consumer confidence next year, which does have an impact on people's propensity to spend money, and the real economy impact of unemployment really starting to gather momentum, he said.

Britain said on Tuesday its economy will stagnate until mid-2012 and could easily fall back into recession. Consumer confidence edged up slightly in November but was still close to a two-year low.

Greene King said pretax profit before exceptional items rose by 5.6 percent to 77.2 million pounds in the first half to October 16. Drink sales rose by 9.9 percent with food sales up 16.3 percent.

The company said it will create 3,000 jobs in Britain over the next three years, including 2,000 apprenticeships for young people aged between 18 and 24. Rival Marston's said Wednesday it would create 1,000 jobs next year.

Shares in Greene King, which have gained 10 percent over the last week, were down 1.8 percent to 474 pence at 1045 GMT.

We believe that Greene King has the organisation, brands and management skills to counter the coming downturn with assurance, said Peel Hunt analyst Paul Hickman.

(Reporting by Matt Scuffham.; Editing by James Davey and Jane Merriman)