UK economy now ninth best, says WEF

Britain moves up one place in the competitiveness charts. But is that saying much?

by Dave Waller
Last Updated: 03 Sep 2014

The World Economic Forum's Global Competitiveness Report, which ranks 144 of the world's economies, is out. Cue the voice of 1980s Top of the Pops chart rundowns, accompanied by the electronic noodling of Paul Hardcastle's The Wizard: Up one place to number nine, it's the UK...

The WEF's 'Top 144' benchmarks countries against 12 factors, including infrastructure, education and training, labour market efficiency, technological readiness and innovation.

The reason for the UK's climb? Lower public borrowing, an efficient labour market, the City's role as a financial hub, and the country's move towards high-tech business.

The report also praised the UK's ICT uptake, 'one of the highest in the world', and its highly competitive and large market – which together 'allows for highly sophisticated and innovative businesses to spring up and develop'.

There were signs of positive UK performance elsewhere too. The UK services PMI has leapt to a 10-month high of 60.5 from July’s 59.1, which is better than expected, while the composite index, which gauges manufacturing, services and construction activity, hit a nine-month high of 59.8, up from 59.0 in July. And the strong PMI data sent the FTSE 100 index to its highest level in more than 14 years – climbing 64.54 points to 6893.72, a gain of almost 1%.

George Osborne described Britain's move up the WEF rankings as 'great news'. Of course, as he said that he was holding up the corner of the number rug with one hand, and coyly sweeping plenty of unsightly detail underneath it with the other.

Britain's escalating debt pile, already at £1.4 trillion, plus its levels of borrowing – and its 'prohibitive tax rates' – helped leave it sitting at a lowly 107th out of the 144 nations in terms of macroeconomic environment. All of a sudden it doesn't sound like quite such a chart smash.

Indeed, the WEF's list this year came with the stark warning that the global economy's health is at risk, despite years of monetary stimulus and reforms. Not that you need to be a multinational economic watchdog to work that out. The WEF ascribed the biggest challenge to 'uneven implementation of structural reforms across different regions and levels of development'.

Klaus Schwab, the WEF's founder, cited the 'strained global geopolitical situation, the rise of income inequality, and the potential tightening of the financial conditions' as factors that 'could put the still tentative recovery at risk'.

You may climb the charts, it seems, but that doesn't mean much if everyone else is singing unlistenable pap too. Even Milli Vanilli hit number 2 in the UK, after all.  

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