Finland and Germany slip in global competitiveness rankings

The report assesses factors, grouped in 12 categories, which drive a country’s productivity and prosperity and found most governments are not implementing structural reforms it says are needed to boost competitiveness.

“The health of the global economy is at risk, despite years of bold monetary policy, as countries struggle to implement structural reforms necessary to help economies grow,” notes the report.

According to the study, the biggest problems, in terms of making EU member states more competitive, is red tape, access to finance, tax rates, labour regulations, and tax regulation.

Despite having five member states listed in the top ten performers, a mixed picture emerges when looking at the whole of the EU.

Some have dropped, improved, or remained in the same spot in the rankings when compared to the previous year.

It places Finland and Germany fourth and fifth respectively, with Switzerland (not in the EU) in the number one spot (for the sixth consecutive year) followed by Singapore and the United States.

Finland dropped one place to fourth due to a “slight deterioration of its macroeconomic conditions” and its high deficit and debt levels.

But Finland’s problems are largely offset by its ability to innovate, investments in research and development, and for its highly transparent public institutions, notes the report.

The EU’s economic engine Germany fell a spot to fifth place due in part to “some concerns about institutions and infrastructure”. Germany remains a top performer in part for reasons similar to Finland.

The study credits Germany’s performance on its ability to innovate, high level of research and development, high quality infrastructure, among other reasons.

The EU’s third best performer in the global rankings is Netherlands in eighth place, followed by the UK, which saw a slight improvement by climbing one spot to ninth.

Sweden dropped four spots to tenth in part because of labour regulations and high tax systems, “considered the two most problematic factors for doing business in the country”.

At the bottom of the list are Portugal, Italy, Bulgaria, Romania, and Greece, coming in at 36th, 49th, 54th, 59th, and 81st place respectively.

The reports notes the wide-ranging performance differences point to a persistent competitiveness divide in Europe between the north with the south and east.

However, the report’s authors suggest a new divide may be emerging “among those countries whose competitiveness is currently lagging” such as France and Italy, and others which are seeing some progress.