Britain falls to 19th in PwC's Escape index, seven places down on its pre-financial crisis position
Britain is struggling to stay in the "premier league" of countries ranked by the consultants PwC after suffering more grievously than rival nations in the slump of 2008-09.
PwC's Escape index – which looks at a range of economic, political, social, technological and environmental indicators of success – placed the UK 19th, down seven places on its pre-financial crisis position.
Britain's fall down a league table headed by Sweden, Switzerland and Singapore was matched only by the declines suffered by the countries worst hit by the eurozone sovereign debt meltdown: Greece, Ireland, Spain and Portugal.
John Hawksworth, chief economist at PwC and co-author of the report, said: "The UK continues to score well as an easy place to do business and recent sharp falls in unemployment show the flexibility of its labour market. But the UK was hit hard by the global financial crisis: since then it has had relatively low GDP per capita growth and high inflation, although both measures improved significantly during 2013."
As Europe's financial centre, the UK was particularly hard hit by the near-collapse of the global banking system in the winter of 2008-09, with national output falling by more than 7% and then recovering only slowly thereafter. It scored badly on many of the economic indicators assessed by PwC, such as living standards, the cost of living and the government's budget deficit.
The sharp decline followed a period between 2000 and 2007 when Britain held its place in the global pecking order despite the strong advances enjoyed by parts of the emerging world.
Hawksworth said the UK was now likely to start moving back up the table after better economic news in 2014.
"UK businesses and consumers are likely to feel the benefit of the current recovery because the brakes went on so hard between 2007 and 2012. Now we're seeing renewed job creation and growth, the UK is likely to be moving back up the index.
"Despite the recent cyclical upturn, our analysis shows that the UK has had some persistent structural weaknesses throughout the period since 2000. We find that the UK lags behind the average of its advanced economy peers in terms of investment, education, trade, income inequality and also general levels of trust in the population."
PwC said its aim was to produce a holistic measure of how countries were performing over time, based on five yardsticks of success: economic growth and stability; social progress and cohesion; communications technology; political, legal and regulatory institutions; and environmental sustainability. Northern European countries dominated the PwC top 10, with China rising five places to 16th, above the US at 18th and France at 20th. None of the four MINT countries – Mexico, Indonesia, Nigeria and Turkey – identified by the economist Jim O'Neill, made it into the top 30.
Hawksworth added: "To graduate to the advanced economy club, it is not enough just to do well on traditional economic indicators such as GDP growth and inflation. Governments and business investors should pay attention to the broader range of measures that our Escape index captures."
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