The cost of Britain's eroding economic freedom

January 12, 2011 11:49 AM

Britain has fallen in an influential index of economic freedom. The Washington based Heritage Foundation and the Wall Street Journal lists the UK at 16th, down from 11th place last year and the first time out of the top 15. The index assesses ten components of economic liberty and derives a score from the sum. This fall follows on from sliding out of the top ten last year and reflects Britain’s recent government expansion, relatively poor record in controlling inflation and the introduction of higher taxes.

The quietly tightening constrictions on British economic freedom is not without cost. As TaxPayers’ Alliance director Matthew Sinclair said in the research note "The economic cost of high spending":
"The existing literature suggests that higher government spending is associated with lower economic growth. That means the rapid rise in spending since 2000 – far greater in the UK than in other developed economies –may seriously affect Britain’s trend rate of economic growth and GDP."

If we are to drag ourselves out of the current economic and fiscal crisis we need to maximise the economic freedom that encourages the business growth that will in turn create prosperity and boost public finances. The prescription is unambiguous: cut harmful taxes, cut wasteful spending and deregulate our markets.Britain has fallen in an influential index of economic freedom. The Washington based Heritage Foundation and the Wall Street Journal lists the UK at 16th, down from 11th place last year and the first time out of the top 15. The index assesses ten components of economic liberty and derives a score from the sum. This fall follows on from sliding out of the top ten last year and reflects Britain’s recent government expansion, relatively poor record in controlling inflation and the introduction of higher taxes.

The quietly tightening constrictions on British economic freedom is not without cost. As TaxPayers’ Alliance director Matthew Sinclair said in the research note "The economic cost of high spending":
"The existing literature suggests that higher government spending is associated with lower economic growth. That means the rapid rise in spending since 2000 – far greater in the UK than in other developed economies –may seriously affect Britain’s trend rate of economic growth and GDP."

If we are to drag ourselves out of the current economic and fiscal crisis we need to maximise the economic freedom that encourages the business growth that will in turn create prosperity and boost public finances. The prescription is unambiguous: cut harmful taxes, cut wasteful spending and deregulate our markets.

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