DESPITE David Cameron’s promise to cut through red tape for British buisinesses, UK economic freedom has risen by just 0.7 percentage points over the past year, according to research out yesterday.
The UK edged up the Heritage Foundation’s 2013 rankings of economic freedom to hit 14th, despite placing behind 159 countries on the government spending rankings, and actually seeing business freedom decline during 2012.
Overall, the UK scored 74.8 out of 100, putting it behind Estonia, Bahrain and Ireland.
And the score paled in comparison to business-friendly Hong Kong, which topped the table for the 19th consecutive year with a tally of 89.3.
After Hong Kong was Singapore, which scored 88, followed by Australia, New Zealand and Switzerland.
Rounding off the top 10 were Canada, Chile, Mauritius, Denmark and placed 10th, the United States.
But a positive note for the UK was its comparison with European peers – within the region the UK was placed fifth, well ahead of France, Germany, Spain and Italy, despite recent reforms in many Eurozone countries.
But according to Institute of Economic Affairs director general Mark Littlewood the slight gain should not be seen as a big victory for policymakers.
“Although the UK’s economic freedom score is up on last year, a lack of significant structural reform is still damaging growth prospects,” Littlewood said. “This year’s score is just 0.3 points higher than in 2010, so our mediocre record can no longer be attributed to the poor decisions by the previous government.”
“The tax burden has grown and businesses are still hampered by significant levels of regulation,” he said.
The warning chimes with recent research from the Bank of England finding that supply-side issues are at least as important as demand in explaining the depth of the slump.
When the Heritage Foundation first published the economic freedom index, in 1995, the UK placed third with a score of 77.9. As recently as 2006, Britain was placed in sixth, with a higher score of 80.4.
But policy related to the recession drove a fall to 16th by 2011, with the think-tank scoring the UK at just 74.5.