UK rises in WEF competitiveness rankings survey

A relatively flexible labour market has helped the UK economy, the WEF says

The UK has risen to eighth from 10th place in an annual study of global competitiveness.

The World Economic Forum's (WEF) survey said the UK had benefited from a more efficient labour market compared with more "rigid" European economies.

The US economy fell from fifth to seventh place, although WEF said it remained the top innovator.

Switzerland topped the table, followed by Singapore and then Finland in the survey of 144 economies.

The ratings are compiled using public data as well as executive opinion.

The survey placed China as the most competitive major emerging economy.

'Innovative businesses'

The WEF said the UK had benefited from "clear strengths such as the efficiency of its labour market" and praised the UK's "sophisticated and innovative businesses".

Global top 10 (previous year in brackets)

1: Switzerland (1)

2: Singapore (3)

3: Finland (4)

4: Sweden (3)

5: Netherlands (7)

6: Germany (6)

7: United States (5)

8: UK (10)

9: Hong Kong (11)

10: Japan (9)

Source: World Economic Forum

However, the body said the country's macroeconomic economic environment - ranked 110th, down from 85th last year - was hindering competitiveness.

The Treasury said it "welcomed" the report, saying the UK's improvement was down to the government's reforms.

The report uses 12 categories to assess a country's ranking: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

The WEF report comes a day after a separate survey indicated activity in the UK service sector had picked up in August on the back of new contracts, increased marketing and, to a lesser extent, better weather.

Europe's north-south divide

The WEF survey showed a clear divide between Europe's northern countries and the troubled periphery economies which are suffering from recessions.

In total, six European economies are in the top 10 - Switzerland (1st), Finland (3rd), Sweden (4th), the Netherlands (5th), Germany (6th) and the United Kingdom (8th).

But the southern eurozone economies are ranked much lower, with Spain in 36th place, Italy 42nd, Portugal 49th and Greece 96th.

The southern economies, which are at the heart of the eurozone sovereign debt crisis, have suffered a chronic lack of competitiveness and low levels of productivity that led to unsustainable imbalances in the economy, followed by rising unemployment.

The WEF urged an overhaul of labour regulations "sooner than later" as one of the necessary reforms to restore growth.

Switzerland maintained its top position thanks to its scientific institutions, a strong collaboration between academia and business sectors, high spending on research and development as well as its high rate of patenting per capita, the WEF said.

US political gridlock

The US ranking has continued to fall due to weakness in the overall economy as well as worries among businesses towards what they perceive as government meddling in the private sector and distrust towards politicians.

The WEF warned that in the US, despite being the world's top innovator with the likes of Google and Facebook, political gridlock over fiscal tightening could dampen growth prospects.

The survey cited an inefficient government bureaucracy and tax rates as the two biggest impediments to doing business in the US.

Posted in: Economic News