Economic Freedom in UK sinks to historic low

Published on Wednesday, 19 September 2012 14:09
Posted by Scott Buckler

The UK is ranked 12th out of 144 countries included in the Economic Freedom of the World: 2012 Annual Report, released today by the Fraser Institute in conjunction with the Institute of Economic Affairs. Last year, the UK ranked 7th

Globally, the average economic freedom score rose slightly to 6.83 in 2010, the most recent year available, after plummeting to its lowest level in nearly three decades with a score of 6.79 in 2009.

"Governments around the world embraced heavy-handed regulation and extensive spending in response to the American and European debt crises, reducing economic freedom in the short term and prosperity over the long term," said Philip Booth, Editorial and Programme Director of the Institute of Economic Affairs.

"In Britain, this was exacerbated by the increase in government spending and regulation in the early twenty-first century. The results, as far as economic growth are concerned, are very clear to see."

The slight increase in this year's worldwide economic freedom score is encouraging. Impressively, all five continents are represented in the global top 10.

Hong Kong again topped the rankings of 144 countries, followed by Singapore, New Zealand, and Switzerland. Australia and Canada tied for fifth overall.

The United States, long considered a champion of economic freedom among large industrial nations, continues its protracted decline in the global rankings. This year, the U.S. plunged to its lowest-ever ranking of 18th, down from 10th in 2008 and second overall in 2002. Much of this decline is a result of higher spending and borrowing on the part of the U.S. government.

Venezuela has the lowest level of economic freedom among the 144 jurisdictions measured. Myanmar, Zimbabwe, Republic of Congo, and Angola round out the bottom five nations.

Research shows that people living in countries with high levels of economic freedom enjoy greater prosperity, higher levels of political and civil liberties, and longer life expectancies.

"Sadly, the bottom-ranked countries offer a significantly lower quality of life, reduced prosperity, and limited opportunities for growth," said Mark Littlewood, Director General of the Institute of Economic Affairs

The UK scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):

•           Size of government: fell to 5.18 from 5.68 in the last year's report

•           Legal system and property rights: changed to 8.75 from 8.74.

•           Access to sound money: stayed the same at 9.58.

•           Freedom to trade internationally: fell to 8.43 from 8.71.

•           Regulation of credit, labour and business: increased to to 7.42 from 7.14

Source: ©IEA

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