Britons say government will get it right on economy - poll

LONDON (Reuters) - Britons expect the economy to deteriorate over the next year but are optimistic that the coalition government's policies will pay off eventually, a poll showed on Monday.

The Reuters/Ipsos MORI poll, released on the eve of what is expected to be the toughest budget in a generation, also showed Prime Minister David Cameron enjoyed an approval rating of 57 percent after just over a month in the job.

Cameron's Conservatives and their smaller Liberal Democrat partners have formed Britain's first coalition government since World War Two. Chancellor George Osborne will present an emergency budget on Tuesday which will set out tax rises and spending cuts to plug a record peacetime budget deficit.

Support for the Lib Dems had slipped five percentage points to 19 percent since the election on May 6, while the Conservatives were up two points at 39 percent among those certain to vote in a general election, the poll said.

Some Lib Dem members fear the coalition with the Conservatives could cause the party long-term damage through a loss of identity.

Forty percent of those surveyed thought that the economic condition of the country would get worse over the next year, while only 35 percent saw an improvement.

This puts the poll's Economic Optimism Index reading into the red at -5 percent after being in positive territory since the start of the year.

However, 61 percent of those surveyed believed the new government's policies would improve the state of Britain's economy in the long term, against 29 percent who disagreed.

That compares with responses last November when only 40 percent of those surveyed thought the policies of the former Labour government would improve the economy.

Osborne said on Sunday that huge budget deficit the biggest threat to Britain's economy and that the emergency budget will save the country from the fate of debt-stricken Greece.

Measures expected to be included in the budget include a bank levy and reform of welfare benefits and public sector pay. Other plans include payroll tax breaks for new businesses, a council tax freeze and a review of public sector pensions.

Three in five people agreed that the government was being honest about the state of public finances, a sign that the government's warnings of hard times to come have hit home.

Ipsos MORI interviewed 1,002 adults from June 18-20 in England, Scotland and Wales.

(Editing by Ralph Boulton)