Britain has slipped to 10th in an influential global competitiveness index after being overtaken by Sweden.
The World Economic Forum thinktank, which hosts the gathering of business and political leaders in the Swiss ski resort of Davos each January, said that Britain has slipped one place to rank as the 10th most competitive economy in the world, with Switzerland and Singapore topping the table.
The WEF assesses the world’s economies across more than 100 different indicators, from the quality of infrastructure to the flexibility of labour markets.
Margareta Drzeniek-Hanouz, the WEF’s lead economist, said both Sweden and the UK had made progress over the past twelve months. But Sweden’s improvement had been more significant, particularly in business sophistication: the extent to which firms use the latest techniques, in marketing for example.
The WEF argued that the UK’s weaknesses include the fragile state of the public finances and the difficulty for firms of obtaining loans — a common complaint from business lobby groups.
“Where the country falls short is in its macroeconomic environment, where government debt and the budget deficit conspire to place it 108th out of 140 countries. It could do better, too, with the quality of its education system (21st) and maths and science in particular (46th) – both long-term problems,” it said.
However, the WEF praised the UK’s strong scientific research base, the quality of collaboration between businesses and universities, and its openness to the rest of the global economy.
In the emerging world, the WEF’s analysts praised India, where Narendra Modi’s government has carried out a series of reforms to liberalise the country’s economy, helping it to stage a “spectacular” 16-place jump up the rankings, to 55th.
It also issued a warning about the health of the global economy, saying “a ‘new normal’ of suppressed economic and productivity growth and persistently high unemployment is damaging resilience and leaving the world vulnerable to another protracted slump”. It called on countries to “step up their efforts to re-accelerate economic growth”.
A spokeswoman for the Department for Business, Innovation and Skills said: “Today’s figures show that the UK remains one of the top 10 best places in the world to start and grow a business. Our economy is growing faster than any other G7 nation and we are the top destination for inward investment in Europe. Our focus is firmly fixed on increasing productivity.”
She added that the government would continue to implement the measures laid out in the Productivity Plan launched by business minister Sajid Javid in the summer.
This article was written by Heather Stewart, for theguardian.com on Wednesday 30th September 2015 06.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010