UK economy is rebounding. Why isn't Cameron benefiting?

After five years of austerity, Britain's economic growth is twice the EU average, its budget deficits have been slashed, and its unemployment is the lowest in years. But David Cameron's reelection is nonetheless uncertain.

The scene at the fringes of the ever-expanding City of London, the hub of global finance, ought to foreshadow a resounding win for British Prime Minister David Cameron in Britain's general election on Thursday.

Skyscrapers are continuously rising to house a seemingly endless inflow of new workers into banks, insurance firms, law offices, and tech start-ups, as Britain's economy grows at twice the pace of the EU average. And traditionally, if an incumbent can tout economic management and leadership, his or her victory is secured.

So why instead are Mr. Cameron’s Conservatives neck-and-neck with Ed Miliband's Labour party, with neither expected to win an outright majority?

Although five years of austerity under Cameron have slashed Britain's budget deficit and reduced the unemployment rate to its lowest since 2008, many voters feel the resulting growth hasn’t been distributed equally or into their pocketbooks.

Rather, they say, the Tories have exacerbated divides between the white and blue collar classes, between the industrial north and wealthier south, and between London and everywhere else.

'Austerity fatigue'

Amid at least a dozen cranes at work on this edge of the City of London, raising edifices bearing the names “The Eagle” or “The Atlas,” the disconnect has turned many voters undecided just a day before polls open.

“They are building all these massive flats, but it masks the marginalization of the city,” says Sania Sajid, a young NGO worker at the Old Street underground station. The Old Street area was rundown just a few years ago, but is now seeing a major face-lift as start-ups move in and old buildings are replaced with new offices.

Ms. Sajid commends Cameron’s economic track record but says she doesn’t know for which party she’ll cast her ballot. “The social and economic gap has increased. There is a real underbelly in London of people who can’t cope.”

A string of spending cuts in welfare, education, and security helped Cameron halve borrowing in the five years to the 2014-15 fiscal calendar, according to the Institute for Fiscal Studies in London. The task was accomplished without fracturing the fragile governing alliance with the Liberal Democrats nor suffocating economic growth. Unemployment at 5.6 percent is at its lowest since the global financial crisis of 2008, with Cameron proclaiming a “jobs miracle” under his watch, and GDP growth, while slowing in the first quarter of the year, is one of the fastest among major developed nations at 2.6 percent last year.

“They have done a great job in placing the UK on track, I don’t see why that should be disrupted,” says Amir, a graphic designer, who declined to give his last name. “Investors are putting their money into this country, and generally speaking it is a better place to live than it was five years ago.”

But economic growth hasn’t helped everyone, especially in the middle. “Even though the economy is doing better, people aren’t really feeling it,” says Tom Mludzinski, head of political polling at ComRes, a public policy consultancy in London. “People see the economy getting better, but not their finances.”

In fact, the Labour party has surged on a sense of “austerity fatigue,” in which living standards haven’t improved, despite jobs growth. Inflation-adjusted earnings have decreased every year since 2009, to levels last seen in the early 2000s, according to the Office for National Statistics. At the same time, the average house price continues to rise, growing by 17 percent only in the last two years, according to the Nationwide building society.

While the two sides try to spin the economic narrative into victory, neither is expected to win an outright majority as fringe parties have eaten away at their support base. In fact, it is the uncertainty of coalition-building after the race that has gained more urgency than who actually wins the most seats on Thursday.

New voices

And those parties have thrust other issues beyond just economic matters onto center stage.

The Scottish National Party (SNP) could see its share of seats surge from six to 56 of the 59 reserved for Scotland in the 650-seat House of Commons, according to the latest polls. While the party failed in its bid for independence in September, its rise is keeping the question of devolution on the agenda, as it portrays an elite Westminster disconnected from the realities of the rest of Britain.

Meanwhile, the United Kingdom Independence Party (UKIP) has tapped into voter frustration on immigration, from inside and outside the EU, and “a general sense of being done with the whole lot of them,” says Martin Farr, a professor of contemporary British history at Newcastle University. Though UKIP is not expected to win more than a few more parliamentary seats, it is chipping away at support for the major parties, particularly the Conservatives.

David Dade, who works at the reception of an office building, says he used to vote Conservative but plans to cast his ballot for UKIP this year. He says that as a pensioner who still must work to make ends meet, he’s disappointed in Cameron, and he agrees with UKIP’s message against immigration, which he says ultimately could hurt British prospects.

“Anyone who comes in from Europe can get a job here, but can also claim benefits, sometimes even claiming benefits in their home country too,” he says. “Immigration and the economy go hand-in-hand, as it brings up unemployment.”