Two top international forecasters have reached widely differing views of Britain's competitiveness. How come?

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The Independent Online
Britain has jumped three places higher in the world competitiveness league, pulling ahead of all other EU countries except Denmark, according to a report published today.

However, the finding contrasts with a rival league table published earlier this week which showed Britain slipping back, overtaken by Finland and Chile.

The two leagues also come up with different winners, with the US falling to fourth place behind Singapore, Hong Kong and New Zealand in today's report, but remaining top ahead of the two Asian countries in the earlier one.

Germany's competitiveness ranking has fallen in both cases, while Japan's is lower in one of the tables.

The more optimistic assessment of British competitiveness today comes from the World Economic Forum, an international business organisation. Jeffrey Sachs, an eminent Harvard University professor, argues in its report that government regulation and big welfare states act as a hindrance to countries' growth prospects.

Britain therefore scores high relative to other European countries for its flexible labour market and low state pension burden. It climbs from 18th to 15th in the WEF's ratings.

However, Germany slips from sixth to 22nd in its league table. The WEF report comments: "Germany, together with many of its partners in the EU, ranks especially poorly in government and market flexibility.''

A competing competitiveness league published earlier this week by the Institute for International Management Development, a Swiss business school that collaborated with the WEF until this year, showed Britain dropping to 19th place from 15th last year and 11th seven years ago. The UK suffered from weak scores on the quality of management and workforce in the IMD's rankings, although the researchers rated it highly for information technology and telecommunications.

Stephane Garelli, a professor at the IMD and University of Lausanne, said uneven reforms over a period of many years meant the standard of living in Britain had fallen.

Both of the rival competitiveness scores combine hundreds of different measures ranging from economic figures such as GDP per head and national savings to structural measures such as the number of mobile phones and competence of managers. The differences arise from the different weights they give to the various measures.

The World Economic Forum places heavy weight on openness to international trade and investment and on flexibility.

Its report notes: "Five of the six most competitive nations are small, open economies with relatively small governments and low tax rates."

The United States comes in at number four, well ahead of Japan and Germany, while all the Asian "tiger economies" make the top 20.

Eastern European nations - many advised in their economic reforms by Professor Sachs - and Latin American countries cluster at the bottom of the league.

"These countries have not yet created the conditions to ensure sustained high rates of economic growth," the report says.

The competing IMD rankings also favour the dynamic Asian economies, They take six out of the top ten places, though the US remains at the top. Professor Garelli agreed that Germany's position had been affected by the crisis in its public finances and by high costs on business.

Comment, this page

Two leading research groups

have reached opposite conclusions

World Economic Forum Institute for Management Development

UK UP from 18th to 15th place UK DOWN from 15th to 19th place.

UK moves ahead of Germany UK languishes behind Germany

Other EU countries slipping Mixed performances by other EU

down competitiveness league countries

UK benefits from labour market UK suffers from labour market

- deregulated, flexible, low low skills and motivation costs

Per capita investment in tele- UK government support for

communications high in UK telecommunications low

Quality of UK road and rail Quality of UK roads and rail

infrastructure weak (low infrastructure good

density per capita)

UK has relatively high UK weak on scientific education

spending on R&D by firms, and no of qualified enginneers

high level of patents granted

Quality of UK management low Quality of UK management low

Singapore and Hong Kong top US, Singapore, HK remain

world league, US down top three, Germany down from

from 1st to 4th, Japan 5th to10th

from 4th to 13th, Germany

from 6th to 22nd

Russia least competitive Russia least competitive