Economic recovery ups UK PM's political capital
By Guy Faulconbridge and Andrew Osborn, ReutersLONDON -- British Prime Minister David Cameron may be close to pulling off one of the most significant feats of his premiership: delivering a solid economic recovery ahead of a 2015 election.
August 17, 2013, 12:04 am TWN
Two consecutive quarters of growth have shifted the sands of British politics: six months ago, lawmakers in his ruling Conservative party warned him that failure to lead Britain out of stagnation could cost him, and them, the election. Those fearful voices have fallen silent.
After cutting Britain's biggest budget deficit since World War Two by a third, Cameron leads what could be the fastest growing major economy in the European Union this year.
“Will the better economic data change the political landscape? Well, economics is the biggest issue,” said Steven Bell, director of multi-asset investment at F&C Asset Management which has about 98 billion pounds (US$151.52 billion) under management.
“Having pursued a policy of austerity, the government will get credibility both for prudent management and for the recovery,” said Bell. “They will get the credit for this.”
Britain's US$2.5 trillion economy grew by 0.6 percent in the second quarter after a 0.3 percent rise in the first quarter, putting it on course to grow by at least 1.4 percent this year.
That would be the strongest annual growth since 2010, the year Cameron forced Labour's Gordon Brown from office by forming a coalition government with the Liberal Democrats after no party won an outright majority in a general election.
Some investors say Cameron's policies may in fact be partly to blame for the recovery's long wait. But they still expect the government to benefit.
“The recovery could have happened a lot sooner with a bit more government support for infrastructure spending in particular,” said Trevor Greetham, asset allocation director for Fidelity's Investment Solution Group, who has responsibility for US$14 billion of assets.