UK in battle to be better at business

AFTER years of decline the United Kingdom is finally moving back up the global rankings of the best places to do business. The World Economic Forum – which organises the annual gathering of global leaders in the Swiss ski resort of Davos – says Britain is the eighth most competitive country in the world.

That is the highest ranking this century and follows a fall under Labour from seventh out of 144 in 1997 to as low as 15th as rising taxes, stifling red tape and ballooning debts damaged business.

Similarly, between 1997 and 2010 the UK fell from ninth out of 59 to 22nd in the World Competitiveness Yearbook published by the Institute for Management Development but has since recovered to 18th.

And on the Index of World Economic Freedom, published by the Heritage Foundation, Britain fell from fifth out of 179 to 16th under Labour but rose to 14th this year.

‘The ranking of the UK in each of the three main international league tables of world competitiveness fell significantly between 1997 and 2010,’ says Tim Knox, director of the Centre for Policy Studies (CPS) think-tank.

‘ The Coalition Government pledged to improve the UK’s competitiveness, and it appears that the relative decline is now being reversed.

‘The Coalition should take some comfort from these findings: our dreadful performance during the New Labour years is slowly being reversed.

‘But they must also accept that government policy does effect the competitiveness of the UK economy – and that there is still so much more to do.’

The rankings provide valuable insight into what the UK gets right and wrong as a place to do business.

Alarmingly, the ‘macroeconomic environment’ in the UK is now ranked 110th, down from 85th last year. Britain’s budget is among the worst in the world – an appalling 137th – meaning just seven countries are deemed to be in a weaker position. Under Labour, the UK fell from fourth to 89th in terms of the ‘burden of government regulation’. It is now 72nd. In 1997 the UK had the fourth most competitive tax system. By 2010 it was the 84th.

Ministers need only look at the list of problems the WEF identifies to see what needs to be done to boost business and in turn the economy. The biggest complaints it identifies are ‘access to financing’ – an issue highlighted by the Daily Mail’s Make The Banks Lend campaign – and ‘tax rates’.

Other problems include ‘inefficient government bureaucracy’, an ‘inadequately educated workforce’, and a ‘poor work ethic’.

Add in concerns over infrastructure and employment laws and the WEF report serves as a blueprint for action that the Government would be wise to follow as it battles to bolster the ailing economy and kick-start growth.

‘If the UK is to improve its competitiveness further, then its tax, regulation and macro- economic environment must all be improved,’ explains Ryan Bourne, head of economic research at the CPS.

‘One of the Coalition’s stated aims was to improve the UK’s competitiveness. On tax and regulation, we appear to be moving in the right direction, albeit slowly. The key going forward is to get to grips with the public finances.

‘If the Coalition is successful in doing this then it appears that their other policies are putting us in a better position to compete in a globalised world economy.’

With the economy languishing in the longest double- dip recession for more than 50 years, the government is under mounting pressure to act.

Business secretary Vince Cable, and business minister Michael Fallon, appointed last week to push a more radical pro-growth agenda, yesterday launched a new assault on red tape – promising to scrap 3,000 burdensome regulations and scale back health and safety laws.

Business leaders welcomed the move.

‘Efforts to reduce the burden of health and safety regulation will be welcome news to many businesses,’ said Adam Marshall, director of policy and external affairs at the British Chambers of Commerce.

But he added: ‘ The overall number of regulations on the books remains far too high. We will measure the Government’s success by the reduction in businesses costs, which means that employers will expect come genuinely burdensome regulations to be scrapped.’

The onus is on the Government to deliver.