Britain Plunges in Global Economic Index

Britain Plunges in Global Economic Index

Iain Dale 1:33 PM

I'm afraid I am busy at work all day so I apologise for posting this press release from the IEA without comment, but I think it should provoke some debate!

Economic freedom in the United Kingdom is declining rapidly, according to the 2010 Index of Economic Freedom, released today by the Heritage Foundation and The Wall Street Journal in association with the Institute of Economic Affairs.

For the first time in the 16-year history of the Index, the United Kingdom has dropped out of the top-ten, falling from 10th to 11th since last year.

The country’s score has dropped from 79 to 76.5, the second biggest decline among the world’s twenty largest economies. Only in the USA is economic freedom declining more rapidly.
The dismal figures reflect in particular reduced scores for freedom from corruption, financial freedom and monetary freedom.

Mark Littlewood, Director General of the Institute of Economic Affairs, commented: "These are deeply depressing numbers for those longing for a sustained economic recovery in the United Kingdom. Just when we need to set free and empower the private sector, Britain is moving in precisely the wrong direction. We need reduced taxation, less regulation and a smaller role for government. What we're getting is exactly the opposite"

The UK performs extremely poorly on government spending, scoring just 41.9 out of a maximum 100. According to the report’s authors:

“…the government’s size and spending have grown significantly under successive Labour governments, damaging Britain’s competitive edge. Prime Minister Gordon Brown plunged Britain further into debt at the onset of the recent financial crisis with bank bailouts and stimulus packages.”

This is particularly worrying because increased government spending has not improved economic crisis performance. In light of the global financial and economic storm, many advanced economies’ governments have stepped up spending to promote growth and employment. The early evidence is that such spending did not work.

The report provides further evidence that the UK is falling behind her economic competitors, particularly those in the Far-East and Australasia.

Hong Kong (score: 89.7) once again tops international rankings for economic freedom, with
Singapore second (on 86.1) and Australia in third spot (82.6).

North Korea has by far the lowest economic freedom rating of the 179 countries analysed, scoring just 1.0. Zimbabwe is second worst, with a score of 21.4.

Professor Philip Booth, Editorial and Programme Director at the Institute of Economics Affairs commented: "This year's index produces unsurprising but very disappointing news. The rise in government spending is part of Gordon Brown's long-term policy agenda and is not just crash related. This government has steadily been eroding economic freedom for sometime and there is a real danger of freefall."