Britain's Cameron narrows Labour lead, ahead on economy

LONDON (Reuters) - British Prime Minister David Cameron's Conservatives have halved the opposition Labour Party's lead to 4 points and are more trusted by voters to handle the economy, a poll showed on Friday.

With an election 17 months away, the survey suggested that a majority of voters thought they would be worse off or no richer if Labour had held on to power in 2010.

Labour is pinning its 2015 election campaign on the argument that Cameron has allowed living costs to spiral, squeezing voters who are faced with rising bills and flat wages.

But Friday's YouGov poll for the Sun newspaper suggested Labour has yet to convince voters that their policies would have lifted living standards.

It gave Labour a four point lead over the Conservatives compared with an eight point Labour lead in the same poll on December 2, three days before the government issued its twice-yearly budget update.

Asked how a Labour victory at the last election in 2010 would have affected their finances, 32 percent said they would have been worse off, 25 percent better off and 31 percent said it would have made no difference.

Asked how the economy would be doing if Labour had won, 42 percent thought it would have been weaker, 21 percent said it would have been stronger and 26 percent said it would have been the same. The remaining 11 percent said they did not know.

Labour was in power during the financial crisis and its economic reputation has yet to recover, polls show. Cameron and his finance minister George Osborne also regularly castigate Labour for allowing the budget deficit to reach a peak of 11 percent of GDP shortly before losing the 2010 election.

Britain's economy has grown more strongly than expected in recent months, but Labour says many people have yet to feel any benefit.

YouGov interviewed 1,902 people on December 11-12.

(Reporting by Peter Griffiths; Editing by Jeremy Gaunt)