The UK as a place to do business: still very highly regarded internationally

In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest reports on the UK’s international ranking on three key metrics:

  • The UK rose a notch from 9th to 8th (out of 190 economies) in the World Bank’s ease of doing business report. The top three economies were New Zealand, Singapore and Hong Kong.
  • However, the UK slipped a place from 8th to 9th (out of 141 countries) in the WEF’s global competitiveness rankings. The top three economies were Singapore, the USA and Hong Kong.
  • According to the latest Global Financial Centres Index (GGCI), London remains the second highest ranking global financial centre (out of 104 major centres) after New York, and ahead of Hong Kong, Singapore and Shanghai.

Concerning central banks:

  • The Fed cut the target range for the federal funds rate by 0.25% to 1.50%-1.75% in October, the third cut since July. Fed Chair Jerome Powell implied that the Fed would hold off further cuts. US GDP growth in 2019Q3 was a better-than-expected 1.9% (QOQ, annualised).
  • The ECB left monetary policy unchanged at its October meeting, after the stimulatory package in September. ECB President Mario Draghi was replaced by Christine Lagarde on 1 November. Eurozone GDP growth was a better-than-expected 0.2% (QOQ) in 2019Q3, with France’s GDP rising 0.3% (QOQ). German data have not yet been released but are expected to be weak.
  • The Bank’s MPC meets next week, no changes in policy are expected.

Concerning UK data releases:

  • The public finances continue to disappoint. Public sector net borrowing (PSNB) in the first six months of FY2019 (April-September 2019) was £39.0bn, compared with £33.2bn in the same period last year (April-September 2018).
  • Bank data showed that consumer credit growth and net mortgage borrowing were little changed in September.

Concerning political developments:

  • A General Election has been called for 12 December. The Early Parliamentary General Election Act 2019 received Royal Assent on 31 October, following agreement by both Houses. The Commons approved the legislation on 29 October (438/20, a majority of 418). Parliament will be dissolved on 6 November 2019.
  • Given the impending General Election and the dissolution of Parliament, the Government’s attempts to get the revised “deal” (as of 17 October) through Parliament have been put on ice.
  • The Treasury announced the Budget, planned for 6 November, had been cancelled.
  • The EU27 agreed on 28 October to extend the deadline to 31 January 2020. The Prime Minister agreed to the extension, also on 28 October. The Brexit deadline of 31 October was, therefore, missed.

Ruth Lea said, “…despite all the ongoing uncertainties over Brexit, the UK is still very highly regarded internationally as a place to do business, as well as being highly internationally competitive according to the latest reports. There was modest promotion in the World Bank’s “doing business” rating, a modest demotion in the WEF’s competitiveness ranking and London remains the second ranked international financial centre after New York. Whilst this is no cause for complacency, it does serve to put the UK economy into some overall international perspective.”

Ruth Lea CBE has been Arbuthnot Banking Group’s Economic Adviser since 2007 and was an Independent Non-Executive Director from 2005-2016.

Ruth co-founded Global Vision in 2007 and was Director until 2010, and was previously the Director of the Centre for Policy Studies (from 2004 to 2007), Head of the Policy Unit at the Institute of Directors (from 1995 to 2003) and Economics Editor at ITN (from 1994 to 1995).  Prior to ITN she was Chief UK Economist at Lehman Brothers, Chief Economist at Mitsubishi Bank, worked for 16 years in the Civil Service (the Treasury, the DTI, the Civil Service College and the Central Statistical Office) and was an economics lecturer at Thames Polytechnic (now the University of Greenwich).

She is the author of many papers and articles on economic issues and has been a Governor of the London School of Economics and Council Member of the University of London.

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