Egyptian cabinet approves $3.2 billion economic stimulus plan

CAIRO | Wed Aug 28, 2013 3:59pm BST

CAIRO (Reuters) - Egypt's cabinet approved on Wednesday an additional 22.3 billion Egyptian pounds ($3.19 billion) in investment projects to boost the economy over the coming 10 months, Deputy Prime Minister Ziad Bahaa el-Din said.

Despite the new spending, the government aims to reduce the budget deficit to 9 percent of gross domestic product in the fiscal year to end-June 2014 from 14 percent last year, Finance Minister Ahmed Galal said.

This it would do by streamlining spending, especially on energy subsidies, Galal said.

The two ministers were speaking to reporters after a cabinet meeting.

(Reporting by Patrick Werr; Editing by John Stonestreet)

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Russia slashes economic growth forecasts, second time this year

A worker operates a mixer of fused aluminium at the foundry shop of the Rusal Sayanogorsk aluminium smelter outside the town of Sayanogorsk, some 480 km (298 miles) south of the Siberian city of Krasnoyarsk, August 21, 2013.

Credit: Reuters/Ilya Naymushin

By Darya Korsunskaya

MOSCOW | Mon Aug 26, 2013 11:02am EDT

MOSCOW (Reuters) - Russia cut its economic forecasts for the second time this year, increasing pressure on Vladimir Putin to revive growth that has faded since a state spending splurge helped secure his election to a third Kremlin term.

The Economy Ministry slashed its forecasts for 2013 and 2014 after growth in the second quarter of this year was the slowest since the slump of 2009, documents obtained by Reuters on Monday showed.

The news broke as the president made one of his many tours to key industrial regions - this time to Kemorovo in the Kuzbass coalfields - to demand greater urgency in developing Russia's vast resource base.

The lower growth forecast reflects home-grown problems of weak industrial output - now expected to barely grow this year - slowing investment and a waning of the feel-good factor that helped Putin win a third term as president in March 2012.

Not even oil prices at a historically-high $110 per barrel have been enough to avert the slowdown in the world's top energy producer - even if Russia's external surpluses and low debts do shield it from the current turmoil in other emerging markets.

"To grow this time it will not be enough to stimulate private consumption," said Vladimir Miklashevsky, an economist at Danske Bank.

Miklashevsky was referring to Putin's past reliance on distributing windfall energy revenues to boost living standards and drive average annual gross domestic product (GDP) growth rates of 7 percent during his first two presidential terms from 2004-08.

The Economy Ministry cut its 2013 forecast to 1.8 percent from 2.4 percent, also hit by weaker exports and consumption growth. The forecast was below median expectations of 2.5 percent growth in a regular Reuters poll of economists.

It downgraded the 2014 outlook to a range of 2.8-3.2 percent from 3.7 percent.

REALITY CHECK

Economy Minister Alexei Ulyukayev has warned that Russia's $2 trillion economy could stagnate, but played down risks of a recession, even though some economists estimate that real growth has now contracted for two consecutive quarters.

Weaker growth will put pressure on Finance Minister Anton Siluanov's budget, which is due to go before parliament soon and which foresees a modest deficit next year.

Economists see next year's forecast as over-optimistic.

"Growth may accelerate next year only if the government increases expenditure substantially," said Natalia Orlova, chief economist at Alfa-Bank.

The government has already broken Putin's pre-election pledge to balance the books by 2015, proposing measures that would only increase Russia's reliance on commodities.

The government has been considering various stimulus measures, unveiling a $13 billion investment plan to build new roads and railways by tapping a rainy-day fund.

Officials and bankers have been pressing, meanwhile, for easier monetary policy to lift growth towards the government target of 5 percent.

The central bank, now led by Elvira Nabiullina, Putin's former economic adviser, kept interest rates on hold in August. It has said it will start cutting rates when inflation is inside its target corridor of 5-6 percent, expected in the second half of 2013.

The economy ministry kept its inflation forecast for the end of 2013 unchanged at 5-6 percent, but raised its 2014 estimate by half a percentage point to 4.5-5.5 percent.

"The central bank will not cut rates. The global environment is setting higher rates in the world economy and we should not ignore it," said Orlova.

The rouble fell to its lowest in four years against the dollar-euro basket the central bank tracks, hit by capital outflows as emerging market investors expect the U.S. Federal Reserve to wind down its money-pumping measures.

(Writing and additional reporting by Maya Dyakina; Editing by Douglas Busvine, Ruth Pitchford)

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Russia slashes economic growth forecasts, second time this year

A worker operates a mixer of fused aluminium at the foundry shop of the Rusal Sayanogorsk aluminium smelter outside the town of Sayanogorsk, some 480 km (298 miles) south of the Siberian city of Krasnoyarsk, August 21, 2013.

Credit: Reuters/Ilya Naymushin

By Darya Korsunskaya

MOSCOW | Mon Aug 26, 2013 11:02am EDT

MOSCOW (Reuters) - Russia cut its economic forecasts for the second time this year, increasing pressure on Vladimir Putin to revive growth that has faded since a state spending splurge helped secure his election to a third Kremlin term.

The Economy Ministry slashed its forecasts for 2013 and 2014 after growth in the second quarter of this year was the slowest since the slump of 2009, documents obtained by Reuters on Monday showed.

The news broke as the president made one of his many tours to key industrial regions - this time to Kemorovo in the Kuzbass coalfields - to demand greater urgency in developing Russia's vast resource base.

The lower growth forecast reflects home-grown problems of weak industrial output - now expected to barely grow this year - slowing investment and a waning of the feel-good factor that helped Putin win a third term as president in March 2012.

Not even oil prices at a historically-high $110 per barrel have been enough to avert the slowdown in the world's top energy producer - even if Russia's external surpluses and low debts do shield it from the current turmoil in other emerging markets.

"To grow this time it will not be enough to stimulate private consumption," said Vladimir Miklashevsky, an economist at Danske Bank.

Miklashevsky was referring to Putin's past reliance on distributing windfall energy revenues to boost living standards and drive average annual gross domestic product (GDP) growth rates of 7 percent during his first two presidential terms from 2004-08.

The Economy Ministry cut its 2013 forecast to 1.8 percent from 2.4 percent, also hit by weaker exports and consumption growth. The forecast was below median expectations of 2.5 percent growth in a regular Reuters poll of economists.

It downgraded the 2014 outlook to a range of 2.8-3.2 percent from 3.7 percent.

REALITY CHECK

Economy Minister Alexei Ulyukayev has warned that Russia's $2 trillion economy could stagnate, but played down risks of a recession, even though some economists estimate that real growth has now contracted for two consecutive quarters.

Weaker growth will put pressure on Finance Minister Anton Siluanov's budget, which is due to go before parliament soon and which foresees a modest deficit next year.

Economists see next year's forecast as over-optimistic.

"Growth may accelerate next year only if the government increases expenditure substantially," said Natalia Orlova, chief economist at Alfa-Bank.

The government has already broken Putin's pre-election pledge to balance the books by 2015, proposing measures that would only increase Russia's reliance on commodities.

The government has been considering various stimulus measures, unveiling a $13 billion investment plan to build new roads and railways by tapping a rainy-day fund.

Officials and bankers have been pressing, meanwhile, for easier monetary policy to lift growth towards the government target of 5 percent.

The central bank, now led by Elvira Nabiullina, Putin's former economic adviser, kept interest rates on hold in August. It has said it will start cutting rates when inflation is inside its target corridor of 5-6 percent, expected in the second half of 2013.

The economy ministry kept its inflation forecast for the end of 2013 unchanged at 5-6 percent, but raised its 2014 estimate by half a percentage point to 4.5-5.5 percent.

"The central bank will not cut rates. The global environment is setting higher rates in the world economy and we should not ignore it," said Orlova.

The rouble fell to its lowest in four years against the dollar-euro basket the central bank tracks, hit by capital outflows as emerging market investors expect the U.S. Federal Reserve to wind down its money-pumping measures.

(Writing and additional reporting by Maya Dyakina; Editing by Douglas Busvine, Ruth Pitchford)

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Russia slashes economic growth forecasts, second time this year

A worker operates a mixer of fused aluminium at the foundry shop of the Rusal Sayanogorsk aluminium smelter outside the town of Sayanogorsk, some 480 km (298 miles) south of the Siberian city of Krasnoyarsk, August 21, 2013.

Credit: Reuters/Ilya Naymushin

By Darya Korsunskaya

MOSCOW | Mon Aug 26, 2013 11:02am EDT

MOSCOW (Reuters) - Russia cut its economic forecasts for the second time this year, increasing pressure on Vladimir Putin to revive growth that has faded since a state spending splurge helped secure his election to a third Kremlin term.

The Economy Ministry slashed its forecasts for 2013 and 2014 after growth in the second quarter of this year was the slowest since the slump of 2009, documents obtained by Reuters on Monday showed.

The news broke as the president made one of his many tours to key industrial regions - this time to Kemorovo in the Kuzbass coalfields - to demand greater urgency in developing Russia's vast resource base.

The lower growth forecast reflects home-grown problems of weak industrial output - now expected to barely grow this year - slowing investment and a waning of the feel-good factor that helped Putin win a third term as president in March 2012.

Not even oil prices at a historically-high $110 per barrel have been enough to avert the slowdown in the world's top energy producer - even if Russia's external surpluses and low debts do shield it from the current turmoil in other emerging markets.

"To grow this time it will not be enough to stimulate private consumption," said Vladimir Miklashevsky, an economist at Danske Bank.

Miklashevsky was referring to Putin's past reliance on distributing windfall energy revenues to boost living standards and drive average annual gross domestic product (GDP) growth rates of 7 percent during his first two presidential terms from 2004-08.

The Economy Ministry cut its 2013 forecast to 1.8 percent from 2.4 percent, also hit by weaker exports and consumption growth. The forecast was below median expectations of 2.5 percent growth in a regular Reuters poll of economists.

It downgraded the 2014 outlook to a range of 2.8-3.2 percent from 3.7 percent.

REALITY CHECK

Economy Minister Alexei Ulyukayev has warned that Russia's $2 trillion economy could stagnate, but played down risks of a recession, even though some economists estimate that real growth has now contracted for two consecutive quarters.

Weaker growth will put pressure on Finance Minister Anton Siluanov's budget, which is due to go before parliament soon and which foresees a modest deficit next year.

Economists see next year's forecast as over-optimistic.

"Growth may accelerate next year only if the government increases expenditure substantially," said Natalia Orlova, chief economist at Alfa-Bank.

The government has already broken Putin's pre-election pledge to balance the books by 2015, proposing measures that would only increase Russia's reliance on commodities.

The government has been considering various stimulus measures, unveiling a $13 billion investment plan to build new roads and railways by tapping a rainy-day fund.

Officials and bankers have been pressing, meanwhile, for easier monetary policy to lift growth towards the government target of 5 percent.

The central bank, now led by Elvira Nabiullina, Putin's former economic adviser, kept interest rates on hold in August. It has said it will start cutting rates when inflation is inside its target corridor of 5-6 percent, expected in the second half of 2013.

The economy ministry kept its inflation forecast for the end of 2013 unchanged at 5-6 percent, but raised its 2014 estimate by half a percentage point to 4.5-5.5 percent.

"The central bank will not cut rates. The global environment is setting higher rates in the world economy and we should not ignore it," said Orlova.

The rouble fell to its lowest in four years against the dollar-euro basket the central bank tracks, hit by capital outflows as emerging market investors expect the U.S. Federal Reserve to wind down its money-pumping measures.

(Writing and additional reporting by Maya Dyakina; Editing by Douglas Busvine, Ruth Pitchford)

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Germany, Britain lead Europe's nascent economic recovery

Shoppers cross Oxford Street in central London August 15, 2013.

Credit: Reuters/Toby Melville

By Alexandra Hudson and Olesya Dmitracova

BERLIN/LONDON | Fri Aug 23, 2013 10:30am EDT

BERLIN/LONDON (Reuters) - Germany confirmed on Friday it had enjoyed its fastest rate of economic expansion in more than a year in the second quarter, and Britain revised up its growth to the same rate.

Although recession still haunts many of Europe's major economies, like Italy, Spain and the Netherlands, analysts said the German and British data showed that at least two of the region's major economic engines are moving into a higher gear.

Consumer morale has jumped to its highest level in two years this month, other data showed on Friday, in a bright sign for the current quarter as well.

Strong domestic demand drove a 0.7 percent quarterly increase in German gross domestic product in the second quarter, matching its growth rate in the first quarter of 2012.

Britain's economy expanded at the same rate as Germany's, equaling the growth it recorded in the third quarter of last year, fuelled by a broad-based pick-up in activity.

The signs of robust growth have also led to more upbeat comments from the region's central bankers, who have hitherto hinted at interest rates remaining low for some time to come.

The German figures reflected a construction flurry after a harsh winter, firms' strong appetite for machines and equipment and healthy private consumption.

"The composition of growth is very good. It is being driven more strongly from within, which is good for Germany and the euro zone," said economist Holger Sandte at Nordea.

The euro zone exited a year and a half of recession in the second quarter.

"It is also positive that firms are investing more in equipment and are not so hesitant anymore," added Sandte on the German data.

Policymakers are sounding a bit more positive, too. European Central Bank policymaker Ewald Nowotny said in an interview on Thursday that he saw no reason for an interest rate cut now.

And German Finance Minister Wolfgang Schaeuble, who is preparing for a federal election next month, said he welcomed the prospect of the ECB raising interest rates once the economy improves.

"Low rates are above all an expression of insecurity on debt markets. That cannot last forever - even if it is a relief to the federal budget," he told business daily Handelsblatt.

ECB President Mario Draghi said after the last rate-setting meeting on August 1 that rates will remain low for some time. The ECB has based this 'forward guidance' on the inflation outlook remaining subdued and growth weak.

Purchasing managers indexes this week confirmed strong growth in Germany this month, although they suggested companies in No.2 euro zone economy France are still struggling.

Analysts said that was hard to reconcile with preliminary figures last week showing the French economy grew 0.5 percent in the second quarter.

In Britain, however, signs of recovery have been far less ambiguous over the last couple of months.

"It does look like the recovery is becoming more self-sustaining," said Philip Shaw, economist at Investec.

Stocks gained after the data, which also showed output rose by a surprisingly strong 1.5 percent from a year ago.

British exports rose at the fastest rate since late 2011, and business investment grew faster than household spending, suggesting a shift towards more balanced growth in an economy that has been driven mainly by domestic consumption and imports.

To encourage spending and investment, the Bank of England said earlier this month it would not raise borrowing costs while unemployment remains above 7 percent, a level it did not expect to be breached for at least three years.

But the threshold may be crossed sooner if Britain's recovery maintains momentum, and since the bank gave its forward guidance, the news on the economy has been predominantly upbeat.

"The Bank of England is therefore facing a growing challenge of how to convince the markets and households that interest rates will not need to rise over the next three years," said Chris Williamson, economist at financial data company Markit.

(Writing by Andy Bruce; Editing by Hugh Lawson)

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In Britain, economic recovery increases PM Cameron's political capital

Britain's Prime Minister David Cameron answers questions asked by workers at an upholstery factory in Long Eaton, central England April 22, 2013.

Credit: Reuters/Joe Giddens/Pool

By Guy Faulconbridge and Andrew Osborn

LONDON | Fri Aug 16, 2013 5:21am EDT

LONDON (Reuters) - 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.

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 ($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 $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 $14 billion of assets.

"But that is not the way things tend to work in the minds of the electorate - you cannot say 'well actually this would have happened earlier and we would all be a lot wealthier with a policy that didn't happen'. In reality it is the strength of the economy at the time of an election that tends to matter most."

For Cameron and his finance minister, George Osborne, the political gamble was always on economic growth. But even as signs emerge that their bet may be paying off, they remain cautious.

Party sources say they are acutely aware of the risk of premature triumphalism 21 months before the election.

When asked on almost a daily basis whether Britain is seeing "the green shoots of recovery", Cameron's spokesman says only that the economy "is healing" or "out of intensive care". He always stresses that tough times still lie ahead.

IT'S THE ECONOMY STUPID

Staking their reputation on reducing Britain's debt mountain and nursing the economy back to health, Cameron and Osborne knew they had just a few years to make inroads into what they said was the profligate legacy of the 1997-2010 Labour governments.

But as the economy stagnated, Britain's two most powerful men were branded "dipsticks" by Rupert Murdoch's Sun newspaper and their privileged backgrounds - both went to expensive schools and were members of the same exclusive high-society dining club at Oxford - were mocked.

One outspoken Conservative lawmaker even called them "arrogant posh boys" who "don't know the price of milk".

Cameron's party lost ground in opinion polls and was convulsed by internal rebellions over Britain's ties with the European Union and over gay marriage, while the opposition Labour party warned voters austerity was killing off the recovery.

But from services and consumer spending to house prices, Britons' best loved measure of economic virility, data now shows the world's sixth largest economy may be about to do better than at any time since the onset of the 2007-2008 financial crisis.

Under its new governor, Mark Carney, the Bank of England upgraded its mean growth projection this month by 0.8 percentage points to 2.5 percent in 2014. If achieved, that would be Britain's fastest annual growth rate since 2007.

"A renewed recovery is now underway in the United Kingdom, and it appears to be broadening," Carney said at his first news conference as Bank of England chief while unveiling a promise -- with caveats -- not to raise interest rates above 0.5 percent until unemployment falls below 7 percent.

While a recovery is underway, the economy is a long way from regaining its pre-crisis strength. Britain remains vulnerable to any more shocks from the euro zone debt crisis and voters' incomes are at some of their lowest levels in a decade.

Yet ultra-loose monetary policy, support for the housing market, the potential of North Sea oil production, and the ability to ease the pain of austerity with tax revenues give Cameron one of the best economic backdrops of his premiership.

If he can keep the recovery on track right up to the next election, Cameron's chances of winning - possibly even the Conservatives' first outright victory since 1992 - increase.

If he wins, Cameron has promised an in-out referendum on Britain's membership of the European Union by the end of 2017. Economic growth could ease voter unease at immigration - one of the drivers of anti-European Union feeling in Britain.

LABOUR

Growth leaves the opposition Labour Party and its leader, Ed Miliband, in a tough spot. Labour's drive to convince voters it can run the economy has fallen flat so far: support for Conservative economic management soared to 40 percent from 28 percent in June, according to a Guardian/ICM poll.

The poll put Labour's overall support at 35 percent, a mere three percentage points higher than the Conservatives. Labour's lead was 12 percentage points in the same poll in February.

Now it is Miliband and Labour finance chief Ed Balls, rather than Cameron and Osborne, who are mocked by the domestic press.

After a protester threw an egg at Miliband's head during a visit to an East London market in August, the Sun branded him "Scrambled Ed" and cast him in a cartoon as the broken-egg character from the English nursery rhyme Humpty Dumpty.

But Labour says improving economic data shows no signs of translating into higher living standards.

"It may be a recovery for those at the top, but it is not a recovery for most people," a senior Labour source told Reuters. "For most, living standards are being squeezed as inflation outstrips wages more and more. This is what we're going to be pointing out."

In a change of tack, Miliband has put the cost of living at the heart of his economic policy, noting rising costs for everything from utilities to train fares.

He plans to attack Cameron with the slogan: "They're out of touch. You're out of pocket."

(Editing by Peter Graff)

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In Britain, economic recovery increases PM Cameron's political capital

Britain's Prime Minister David Cameron answers questions asked by workers at an upholstery factory in Long Eaton, central England April 22, 2013.

Credit: Reuters/Joe Giddens/Pool

By Guy Faulconbridge and Andrew Osborn

LONDON | Fri Aug 16, 2013 5:21am EDT

LONDON (Reuters) - 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.

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 ($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 $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 $14 billion of assets.

"But that is not the way things tend to work in the minds of the electorate - you cannot say 'well actually this would have happened earlier and we would all be a lot wealthier with a policy that didn't happen'. In reality it is the strength of the economy at the time of an election that tends to matter most."

For Cameron and his finance minister, George Osborne, the political gamble was always on economic growth. But even as signs emerge that their bet may be paying off, they remain cautious.

Party sources say they are acutely aware of the risk of premature triumphalism 21 months before the election.

When asked on almost a daily basis whether Britain is seeing "the green shoots of recovery", Cameron's spokesman says only that the economy "is healing" or "out of intensive care". He always stresses that tough times still lie ahead.

IT'S THE ECONOMY STUPID

Staking their reputation on reducing Britain's debt mountain and nursing the economy back to health, Cameron and Osborne knew they had just a few years to make inroads into what they said was the profligate legacy of the 1997-2010 Labour governments.

But as the economy stagnated, Britain's two most powerful men were branded "dipsticks" by Rupert Murdoch's Sun newspaper and their privileged backgrounds - both went to expensive schools and were members of the same exclusive high-society dining club at Oxford - were mocked.

One outspoken Conservative lawmaker even called them "arrogant posh boys" who "don't know the price of milk".

Cameron's party lost ground in opinion polls and was convulsed by internal rebellions over Britain's ties with the European Union and over gay marriage, while the opposition Labour party warned voters austerity was killing off the recovery.

But from services and consumer spending to house prices, Britons' best loved measure of economic virility, data now shows the world's sixth largest economy may be about to do better than at any time since the onset of the 2007-2008 financial crisis.

Under its new governor, Mark Carney, the Bank of England upgraded its mean growth projection this month by 0.8 percentage points to 2.5 percent in 2014. If achieved, that would be Britain's fastest annual growth rate since 2007.

"A renewed recovery is now underway in the United Kingdom, and it appears to be broadening," Carney said at his first news conference as Bank of England chief while unveiling a promise -- with caveats -- not to raise interest rates above 0.5 percent until unemployment falls below 7 percent.

While a recovery is underway, the economy is a long way from regaining its pre-crisis strength. Britain remains vulnerable to any more shocks from the euro zone debt crisis and voters' incomes are at some of their lowest levels in a decade.

Yet ultra-loose monetary policy, support for the housing market, the potential of North Sea oil production, and the ability to ease the pain of austerity with tax revenues give Cameron one of the best economic backdrops of his premiership.

If he can keep the recovery on track right up to the next election, Cameron's chances of winning - possibly even the Conservatives' first outright victory since 1992 - increase.

If he wins, Cameron has promised an in-out referendum on Britain's membership of the European Union by the end of 2017. Economic growth could ease voter unease at immigration - one of the drivers of anti-European Union feeling in Britain.

LABOUR

Growth leaves the opposition Labour Party and its leader, Ed Miliband, in a tough spot. Labour's drive to convince voters it can run the economy has fallen flat so far: support for Conservative economic management soared to 40 percent from 28 percent in June, according to a Guardian/ICM poll.

The poll put Labour's overall support at 35 percent, a mere three percentage points higher than the Conservatives. Labour's lead was 12 percentage points in the same poll in February.

Now it is Miliband and Labour finance chief Ed Balls, rather than Cameron and Osborne, who are mocked by the domestic press.

After a protester threw an egg at Miliband's head during a visit to an East London market in August, the Sun branded him "Scrambled Ed" and cast him in a cartoon as the broken-egg character from the English nursery rhyme Humpty Dumpty.

But Labour says improving economic data shows no signs of translating into higher living standards.

"It may be a recovery for those at the top, but it is not a recovery for most people," a senior Labour source told Reuters. "For most, living standards are being squeezed as inflation outstrips wages more and more. This is what we're going to be pointing out."

In a change of tack, Miliband has put the cost of living at the heart of his economic policy, noting rising costs for everything from utilities to train fares.

He plans to attack Cameron with the slogan: "They're out of touch. You're out of pocket."

(Editing by Peter Graff)

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Oil rises slightly on US economic optimism

NEW YORK (AP) — The price of oil rose slightly Thursday, as optimism about the U.S. economy helped erase some early losses.

Benchmark crude for September delivery rose 10 cents to close at $105.49 a barrel on the New York Mercantile Exchange. Oil fell as low as $104.08 before recovering.

Orders for long-lasting U.S. factory goods rose in June. The increase suggests companies are more confident in the economy and could boost economic growth in the second half of the year.

The report helped "to conjure up images of increased petroleum demand from the US industrial sector," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.

At the pump, the average price for a gallon of gas held at $3.66 a gallon. That's about 17 cents higher that at this time last year. But Tom Kloza, chief oil analyst at GasBuddy, said this week's declines in oil and gasoline futures bode well for drivers.

"Right now, the stars are aligning for a little bit of gasoline price relief," Kloza said.

Wholesale gasoline futures fell 4 cents to $3.02 a gallon and are down 10 cents this week.

Brent crude, which is traded on the ICE exchange in London, rose 46 cents to finish at $107.65 a barrel.

In other energy futures trading on Nymex:

— Heating oil lost 1 cent to end at $3.04 a gallon.

— Natural gas retreated by 5 cents to finish at $3.64 per 1,000 cubic feet.

_____

Pablo Gorondi in Budapest contributed to this report.

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