The UK has jumped two places to sixth in the World Bank’s annual Ease of Doing Business report. Finally, something for the government to cheer about, after its humiliating defeat in the House of Lords last night over cuts to tax credits.
Singapore and New Zealand kept the top two spots in the index, which is often used to woo investors, particularly to supposedly riskier countries. They were followed by Denmark, South Korea and Hong Kong, while the UK was ahead of the US and the rest of the Nordic states.
The World Bank gave a big tick to the UK’s corporation tax cuts – the rate has been slashed from 28% to 20% in the last five years, and is set to fall to 18% by 2020. It was less impressed by increases to council and environmental taxes and court fees for filing claims to enforce contracts.
Nonetheless, business secretary Sajid Javid, who vowed to ‘sweep away burdensome red tape’ on taking the job in May, was able to crow that this was ‘international recognition of the UK’s strong and stable business environment, competitiveness and entrepreneurial spirit.’
The Doing Business report has its drawbacks, though – many of which the World Bank itself admits. For a start, it assumes regulation and taxes are bad in and of themselves, when a certain level (its debatable exactly what and how much and varies between countries, of course) are necessary for companies to survive and thrive.
It also doesn’t cover harder-to-measure areas like corruption, infrastructure and skills. Nor does it gauge how well regulations actually correspond with the reality of day-to-day business. For example, Rwanda hauled itself from 158th place in 2005 to 46th in 2014 (although it sank to 62nd this year), but has been accused of merely tinkering with laws in some instances to essentially game the rankings.
The ranking is still useful, though, as long as its drawbacks are taken into account. Business is not an exact science after all.
The 10 easiest countries to do business
2. New Zealand
4. South Korea
5. Hong Kong