Big job: Sunak greets Sweden’s Prime Minister Ulf Kristersson outside Number 10 Downing Street. The survey underscores the challenge Sunak’s government has in reviving economic growth with a labour force that has shrunk since the pandemic. — Reuters
LONDON: The United Kingdom (UK) has fallen six places in the global economic competitiveness rankings because business leaders have lost confidence in the country, due in part to “government incompetence”.
The annual World Competitiveness Ranking from the International Institute for Management Development saw the UK plunge from 23rd to 29th out of 64 countries.
In a separate analysis, the Institute for Public Policy Research (IPPR) warned that years of underinvestment are holding back growth and harming ambitions to build up green industries.
It estimated the nation would have received an extra £560bil (US$720bil or RM3.3 trillion) in real terms had investment from private firms and the government stayed at the Group of Seven average since 2005.
“The UK is experiencing a debilitating case of investment phobia, and the government’s aversion to investing to seize future opportunities is stopping us from getting out of the growth doom loop we find ourselves in,” said George Dibb, associate director for the economy at IPPR.
The figures underscore the challenge Prime Minister Rishi Sunak’s government has in reviving economic growth with a labour force that has shrunk since the pandemic.
Political leaders from all parties are concerned about the UK’s stagnating productivity and sticky levels of inflation, which have undermined the confidence of investors both in stocks and in businesses.
In the competitiveness rank, the UK lost ground on all the key indicators, which is a worrying sign for the government, which wants to attract investment to boost growth.
Respondents said the country had become more bureaucratic, the government less efficient, and the workforce less productive.
Denmark held on to the top spot in 2023, and Ireland jumped nine places to second. Switzerland, the Netherlands and Singapore completed the top five.
“The dramatic drop in the survey indicators suggests a systemic pessimism about the future,” Arturo Bris, lead researcher on the rankings and director of the IMD World Competitiveness Centre, said in an interview. “The deterioration in business sentiment says executives are losing confidence in the country.”
More than 6,400 senior executives from across the world were interviewed for the report. Just 3% of respondents said the competency of the government made the UK an attractive destination for investment.
“Government incompetence, poor workplace culture, and restrictive immigration laws were among several reasons why the UK fared badly,” the report said.
The report also found that the UK is becoming increasingly bureaucratic, despite the government’s pledge to use “Brexit freedoms” to cut regulation. The UK fell 12 places in the bureaucracy sub-ranking from 15th to 27th, while France climbed from 44th to 41st, Bris said.
France remained less attractive than the UK, dropping five places to 33rd in the rankings. Germany fell seven places to 22nd.
The survey was conducted between February and May but reflected the political chaos of 2022, a year in which the UK got through three prime ministers and four chancellors.
The struggling economy, with inflation higher and the labour market tighter than other leading industrial nations, will have also affected sentiment badly, Bris said. — Bloomberg
