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As per the title. I'm thinking German style wooden huts etc.

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One might argue that German-style huts aren't very traditional to the Lake District... – Gagravarr Nov 19 '12 at 3:04
Then again I saw what I only knew previously as a Christkindlmarkt on the main street of Tbilisi Georgia last Christmas so you never know... – hippietrail Nov 23 '12 at 5:51
How can a "German" market be traditional to anywhere in the uk? – Ian Ringrose Jun 21 at 14:04

Christmas markets are not really part of the British tradition in the way that they are elsewhere - at least not since Oliver Cromwell.

There are traditional German (and other) Christmas markets in various places in Britain, as shown in the above link. However none seem to be close to the Lake District.

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It looks like there will be a Christmas market in Barrow-in-Furness in 2012. There's also a review of the market from 2011.

It's not exactly the answer you were looking for, in that it's technically not the Lake District, and not really German, but it may be close enough on both counts to be useful to you.

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Of sorts, Ulverston has a large Christmas market every year, called the Ulverston Dickensian Christmas Festival. It has grown quite large over the years, and takes in most of the central streets of the town. Quite a few locals (I'm one) dress up in Dickensian attire, and get into the spirit of things.

I think you could safely say the market has German elements to it, bratwurst vendors, traditional breads, cheeses, lots of local produce and art, fun rides for the children, and yes wooden huts. There's a good blog post. Ulverston is extremely close to Lake District, about 2 miles south, 15-20 minutes to Coniston.

Ulverston Christmas Market

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