World economic freedom is again on the rise. Policy missteps that contributed to fiscal crisis and recession have been repudiated by voters in some countries and disciplined by market forces in others.
Countries that have stayed true to the principles of economic freedom are reaping the rewards: rapid recovery and renewed growth. In fact, average incomes in countries that gained economic freedom this year are projected to grow more than 4 percent!
However, this year the UK has fallen out of the top 15 most economically free countries in the world. The UK does particularly badly when ranked on fiscal freedom and government spending.
Commenting on the Index, Philip Booth, Editorial and Programme Director of the Institute of Economic Affairs, said:
“The decline in economic freedom in the UK is doing significant harm to business and the UK’s growth prospects. The coalition must act urgently to reverse this disturbing trend.
“These figures reflect what happened under the last government, but should be a wake-up call to the coalition. Action that has been taken by the current government so far is unlikely to reverse this downward trend in economic freedom.
“The coalition has overseen an increase in tax through changes to Capital Gains Tax, VAT and fuel duty. In many areas regulation has increased or is set to increase. Alongside this the trend in public spending growth will not be reversed until next year and, even then, it will only return to the levels of five years ago. Much more drastic cuts are needed.
“The introduction of the Equalities Act is yet another area where we have seen an encroachment on economic freedom. Taken together these factors create a difficult environment for businesses, at a time when government should be pulling back in order to allow them to flourish.”
2011, Published by the Heritage Foundation in association with the IEA, ISBN 978 0 89195 282 4, 460pp, PB