The World Economic Forum (WEF) recently published their annual report on global competitiveness.
The report assesses the economic situation of 140 countries taking into account numerous different factors to determine an overall ranking. This year, the UK has dropped down one spot, and now sits in 9th place.
Economists are justifiably sceptical of the idea of competitiveness when applied at the country level and used for cross-country comparisons. Rankings, like the recent WEF rankings, are of little value in telling you whether one country is “doing better than another”.
However, for any one country, the evolution of some of the underlying indicators over time can tell you what risks a country is facing. It is no surprise that the UK faces adverse risks because of potential Brexit shocks.
As we explain in a number of recent articles, two issues of fundamental importance to the UK (services and access to skills) have either been neglected or used as political bargaining chips.
Around 80% of the UK economy consists of services, with knowledge-intensive ones being critical, both in and of themselves and as suppliers of key inputs to other sectors, whether services or manufacturing. So the prospect of disruption in these areas is likely to adversely affect the UK.
Frontier Economics regularly advises clients on international trade issues.
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