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UK still one of most competitive economies

Staff Writer |
In Europe, The Netherlands continues its climb toward the top of the Competitivenes Index, improving its score and rising by one spot to 4th.

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The Netherlands scores especially high on the quality of its scientific research institutions (4th) and closeness of links between universities and the private sector (5th).

Despite a slight improvement in its overall score, Germany drops one place to 5th. Its macroeconomic environment is generally stable, with a very low government deficit, yet—like the rest of the euro zone — it faces near-zero inflation.

The country continues to push the innovation frontier, ranking high on the pillars of technological readiness (10th), innovation (5th), and business sophistication (3rd). Germany does well in efficiently using its talent (14th), supported by management practices that encourage worker involvement.

Sweden moves up three places to 6th with improvements in the basic factors of competitiveness, especially the macroeconomic environment. Growth has been robust, at 3.7 percent in 2016,29 and the country has managed to significantly decrease its deficit in 2015, jumping 30 places to 22nd on this indicator.

The labor market functions reasonably well and Sweden has a high employment rate, with a high level of women’s participation in the workforce.

However, there is still room for improvement in labor market flexibility: Sweden has dropped 26 places to 120th in terms of the effect of taxation on incentives to work, and restrictive labor regulations are perceived as the second most problematic factor for doing business.

The country also faces a difficult housing market: a continued increase in house prices could impede mobility and negatively impact labor market efficiency.

Currently the United Kingdom is still one of the most competitive economies in the world, moving up three places to 7th on the back of marginal score improvements. (The data were collected before the Brexit vote.)

Competitiveness of the UK economy has, up to now, rested on highly efficient goods and labor markets (9th and 5th, respectively); business processes are highly sophisticated (7th) and supported by a high level of digital readiness by both businesses and consumers (3rd).


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