UK leaps up world economic rankings

THE UK has leapt up the world economic league table in the past year, climbing to within a whisker of the United States, according to a controversial annual assessment.

Despite the Government's newly-launched drive to improve national competitiveness following a damning assessment by management consultancy McKinseys, Britain is the only big European economy to feature anywhere near the top of the world rankings published yesterday.

These are compiled each year by the World Economic Forum, the body which organises the annual get-together of influential business and political leaders in Davos.

The UK is now the fourth most competitive country after Singapore, Hong Kong and the US, it says, up from seventh place last year, after overtaking Canada, New Zealand and Switzerland.

Other gainers this year are the Netherlands, Ireland, Finland and Denmark. But other Asian economies have slipped while the big Continental countries continue to languish in the middle of the league.

In an analysis of the results Jeffrey Sachs, an eminent Harvard professor, concludes that two types of country are the most competitive. Top of the league come the small but very open trading economies like Singapore. Close behind are the Anglo-Saxon countries, including the US, UK and Canada.

This pattern is due to the weight the report's rankings place on light regulation and the absence of red tape. Any single measure of competitiveness is bound to reflect the assumptions that have to be made to summarise an economy in one number, and the World Economic Forum is a firm advocate of free-market capitalism.

Thus Britain's leap from 15th to 7th place between 1996 and 1997 was acclaimed by the Conservatives in the run-up to last year's election as a clear vote of confidence in their economic policies. The Labour party, in reply, focused on alternative figures showing dismal growth in the UK's national output per head.

The WEF's overall "competitiveness index" is calculated by averaging a wide range of sub-indices measuring the openness of the economy, employment laws, the quality of government, and the national infrastructure.

The explanation for the UK's ascent in the latest 12 months lies in continuing improvements in infrastructure, government deregulation and labour market "flexibility". The financial system and institutions such as the competition authorities and the judiciary continued to score high marks.

However, in a conclusion that will come as no surprise to exporters, the strength of sterling against overseas currencies counts as a key liability, along with low national savings and investment and weaknesses in technical education.

Singapore and Hong Kong get top billing once again despite the fact that the Asian economic crisis means both will suffer a sharp slowdown this year. The report admires their minimal governments and openness to international trade and finance.

However, Indonesia, Malaysia and Thailand have all fallen in the rankings this year while Korea's position was little changed at number 19.

Most of Asia's former tigers remain ahead of France, Germany and Italy, despite the economic whirlwind that has caused them such upheaval during the past 12 months. The Continentals are marked down heavily for their rigid labour markets and expensive social welfare systems.

Less controversially, a t the bottom of the league are Eastern European countries, and other emerging economies such as India and Zimbabwe, where corruption is rife, institutions and infrastructure fragile, and organised crime is often far more efficient than governments. The report once again blames the legacy of socialism.

Business outlook, page 23

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
tech
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
life
News
i100
Life and Style
tech
Voices
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Cancer Research UK: Corporate Partnerships Volunteer Events Coordinator – London

Voluntary: Cancer Research UK: We’re looking for someone to support our award ...

Ashdown Group: Head of IT - Hertfordshire - £90,000

£70000 - £90000 per annum + bonus + car allowance + benefits: Ashdown Group: H...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions