Economic worries nag at voters before UK poll

Fears of an economic downturn are nagging at voters' minds in the northern English city of Leeds before this week's local council elections that are a crucial test for Prime Minister Gordon Brown.

Leeds, a city of 750,000 people, has been transformed in the last decade from a declining industrial centre into a prosperous metropolis thanks to thriving financial services and retail sectors.

The city has created 57,000 jobs in the last 10 years, leading the Labour government to hold up Leeds as evidence of the success of its economic policies since taking power in 1997.

But with Britain's economic growth softening and house prices starting to fall due to the global credit crunch, the Leeds economic miracle faces its greatest test.

Brown's ability to pilot the economy through the storm is also key to how the Labour Party performs in Thursday's local council polls and in a general election due by mid-2010.

Voters in Leeds were worried about the economy, but several said they had not yet been hit personally by the slowdown.

Construction worker Scott Wood, 37, said: "I think we're teetering very close to the edge of a recession."

A lot of people were "very worried and very nervous about spending money", he said.

A woman, who declined to give her name, was concerned about education, health and the upkeep of the town, but not the economy.

"I'm just trying to work out at the moment whether it really is an issue or whether it's just something that being whipped up by the media, because personally we're okay at the moment."

HOUSE PRICES

Leeds council says employment in the city grew by 14.2 percent between 1998 and 2008, higher than the national figure of 11 percent. Over the next decade, Leeds is forecast to continue beating the national figure for jobs growth.

Signs of wealth can be seen in the luxury stores such as Harvey Nichols and Louis Vuitton, the Bentley parked near the city centre and the busy bars and restaurants along Greek St.

Insurance adviser Richard Brown, 34, said: "I think house prices are going down just like anywhere else really I don't think it's a particular concern for most people."

Many residents believe, however, that the extensive building of smart new apartments in the city centre has been overdone, leaving them vulnerable to a fall in the property market.

"Undoubtedly, it's going to be a bubble that's going to burst and whether that could harm the local economy or not remains to be seen," said David Oakes, 54, who works in financial services.

Property prices in Leeds dipped 2 percent in the first quarter of this year compared with a year earlier, building society Nationwide said this month.

A local newspaper reported on Friday that plans for a 24-storey tower, the centrepiece of a 160 million pound ($317 million) Leeds regeneration scheme, had been scrapped, a victim of the property market slowdown.

Yet house prices in the city are up 162 percent over the last decade and the city's politicians are divided on the severity of the economic challenge ahead.

"The big local issues are about making sure that Leeds weathers the economic downturn," said Andrew Carter, the Conservative leader of the council.

But Keith Wakefield, leader of the Labour group, played down the fears. "Okay there are some investment decisions on hold, but we are a city still very much growing employment opportunities," he said.

Leeds was governed by Labour for 24 years until 2004. Since then, Conservatives and Liberal Democrats have governed in coalition, with Labour still the largest single party.