UK still struggling to compete
BRITAIN’S economy is less competitive than European rival Germany’s, and other English speaking nations like Australia, Canada and the USA, the IMD’s world competitiveness yearbook revealed today.
High inflation, rising unemployment and a lack of entrepreneurial environment all counted against the UK, although cuts to corporation tax and gradual steps to reduce the budget deficit dragged the country up from 20th place to 18th as other countries continued to struggle with their debts.
Out of the 59 countries measured, Britain ranks only 57th for entrepreneurship, 49th in language skills and 38th for effective personal income tax rates.
Competitor Germany climbed the list from 10th to 9th, as its government finances improved sharply, long-term unemployment fell and its trade position strengthened even further.
Hong Kong came in as the most competitive economy in the world for the second year running.
The IMD business school praised the country’s public finances, low unemployment and all-round resilience.
However, the country was still warned against becoming complacent, as it faces challenges from the economic slowdown in China.
Meanwhile the US lost the top spot, which it held jointly with Hong Kong in 2011, as it dropped in the government efficiency rankings from 19th to 22nd, with worsening business legislation, while rising inflation and long-term unemployment also counted against it.
Although the US remains in the number two spot, IMD professor Stephan Garelli warned against letting it slip further.
“US competitiveness has a deep impact on the rest of the world because it is uniquely interacting with every economy, advanced or emerging,” he explained.
“No other nation can exercise such a strong ‘pull effect’ on the world. Europe is burdened with austerity and fragmented political leadership and is hardly a credible substitute, while a South-South bloc of emerging markets is still a work in progress. In the end, if the US competes, the world succeeds.”