The Centre for Policy Studies says the UK has become less competitive internationally and to reverse the trend Government should open public services to competitive forces, deregulate and cut taxes.
The Tory think tank says the coalition needs to restore competitiveness to deliver the growth Chancellor George Osborne is relying on for his deficit reduction programme.
CPS acting director Tim Knox says: “If growth is the key which will release us from our economic and fiscal predicament, then re-establishing competitiveness is crucial. In order to return the UK to its competitive position achieved in the late 1990s, the Coalition will need to open public services to competitive pressures, deregulate enterprise and lower the tax burden. Our fall down the league tables shows these are steps we cannot afford not to take.”
In a new paper the CPS reviews three competitiveness reports and their findings, concluding excessive regulation, high taxes and mishandling of government finances are to blame for the slide in international competitiveness.
The World Economic Forum’s global competitiveness report says the UK has fallen from seventh in 1997 to 12th in 2010, The Institute for Management Development’s world competitiveness yearbook ranking for the UK fell from ninth in 1997 to 22nd in 2011, and the Heritage Foundation’s Index of World Economic Freedom says the UK has gone from being the fifth most competitive economy in 1997 to sixteenth this year.
The WEF puts the UK mid-table on macroeconomic mismanagement at 72nd out of 139 countries, but further down for regulatory burden, 89th and government debt, 108th. It puts the UK in the top ten for the size of the market and labour market efficiency.
The CPS was set up by Margaret Thatcher and her cabinet colleague Sir Keith Joseph in 1974 to, in his words “convert the party to economic liberalism”.