How red tape is strangling the UK economy
FREE email from MoneyWeek
Discover the latest profit opportunities and understand what’s really going on in the investment world with our punchy daily email. CLICK HERE
This genius investor does dizzying levels of research to uncover...Half Price Shares!
During last month’s budget, Gordon Brown portrayed Britain as “performing manfully in a tough global environment”, as David Smith points out in The Sunday Times. Yet according to the IMF’s chief economist, Raghuram Rajan, the world has “never had it so good”. It is enjoying its most protracted boom for over 30 years: global growth should reach 4.9% in 2006, eclipsing 4% for the fourth successive year.
Growth is continuing in America, major emerging economies are exceeding expectations and even the eurozone has been recovering. Indeed, against this backdrop, Britain’s recent performance is hardly inspiring, with growth slumping to 1.8% last year and tipped to make a mild recovery to 2.5% this year. Given the global boom, why aren’t we doing better?
Last year’s slowdown, along with a gradual upswing in unemployment, suggests “we may have picked up some of the slow-growth bug” from the continent, thanks to our close ties with the region, says Smith.
Higher taxes and red tape have hardly helped matters, says James Frayne in The Business. The British tax burden will overtake Germany’s this year, and whereas the UK once boasted one of the lowest rates of corporation tax in the OECD, it now has one of the highest. Red tape has proliferated amid EU regulations and “political interference”, which explains why we have slipped from second to eighth in the Economist Intelligence Unit’s league table of competitiveness. Furthermore, Britain suffers more graduate emigration than any other developed country, according to a recent World Bank report, which hardly augurs well for competitiveness.
Britain has joined the decline of Europe, says The Business. Gordon Brown placed a dynamic economy “firmly into the mainstream of European tax-and-spend levels, with consequent sclerotic levels of European-style growth”.
FREE! For all our latest advice on making profitable investments, claim your 3-week FREE trial of the MoneyWeek website and magazine now.
Money Morning is the FREE daily email from MoneyWeek
– a punchy round-up of the latest investment news and profit opportunities.
DON’T MISS IT!
