UK's joyless recovery poses poll challenge for Cameron

The UK votes on Thursday after two years of strong growth, booming employment and improving public finances. But the recovery has so far failed to yield a big boost in the opinion polls for David Cameron. Why?

The answer lies in the contrast between the broad economic picture, which is improving, and the difficulties facing voters, who are struggling with living standards that have only just begun to recover.

"Yes the economy has recovered, but voters are not feeling quite as flush as they could have," said George Buckley, chief UK economist at Deutsche Bank.

Inheriting a huge government deficit and the aftermath of the financial crisis, the Conservative/Liberal Democrat coalition had a difficult start in 2010, with the economy stuttering for much of their first two and a half years in power.

But growth picked up in 2013, with Britain becoming the fastest-expanding major advanced economy. Unemployment has fallen from 7.9 per cent to 5.6 per cent, half the level of the eurozone. The public finances are slowly on the mend, with the deficit halving to 4.8 per cent of national income.

The problem for the coalition is that voters have yet not seen what they had hoped for. The flipside of the UK "jobs miracle" has been poor productivity and wage growth, which has meant a slow recovery in living standards.

According to the Institute for Fiscal Studies, a think-tank, household income grew just 1.8 per cent in real terms between 2011/12 and 2014/15. In the first three years of recovery after the recession of the early 1980s, it climbed by 9.2 per cent.

While real incomes have started to rise more quickly over the past year, there is still a lot of ground to make up. Living standards in 2014/5 were barely 3 per cent higher than a decade earlier.

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While the economy has added nearly 2m jobs throughout this parliament, not all of them have been traditional full-time roles: over the course of the parliament about 30 per cent of the growth was from self-employment.

Meanwhile, about 16 per cent of part-time workers say they cannot find full-time work, up from 9 per cent before the recession.

The number of first-time home buyers plummeted after the financial crisis and has never recovered, as many young people are unable to raise the deposits needed to buy property.

The young have also had to contend with much higher levels of student debt than recent peers: the IFS has estimated that average debts on graduation are now £44,000 among those who started in 2012.

Britons know that the overall economic situation has improved, but are far less certain whether it has improved for them.

The European Commission survey of consumer confidence shows the balance of people in the UK who believe the general economic situation has improved over the past 12 months is at its highest level since 1987.

But dig deeper into the survey and the picture is more nuanced. When asked about their household's financial situation over the past year, the figures are only just beginning to return to the levels seen before the financial crisis. They are well below the highs seen in the early 2000s during Tony Blair's first term in office.

Phillip Shaw, economist at Investec, said that despite rising consumer spending and confidence, "many people in the UK will still consider times to be tough".

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