Could Economic Freedom and Competitiveness make up for High Levels of Government Spending? The UK still most attractive to investors in Europe!

Posted on June 3, 2010 by


James Close from Ernst & Young told CNBC on Wednesday that the UK was still attracting the most Foreign Direct Investment in Europe.  Amidst the sovereign debt fears in the developed world, the UK stands out despite huge government spending and unprecedented debt to GDP ratio.  According to James Close, the things that matter to investors are a high level of economic freedom, low corporate taxation, availability of skilled labor and infrastructure.  Although the language and culture play a role in the investment decision, US investors are particularly choosing the United Kingdom because the UK has lower corporate tax rates than the US.  Could economic freedom  and competitiveness make up for high levels of government spending?  How does the United Kingdom fair in terms of economic freedom on the European continent? 

 For over a decade, The Wall Street Journal and The Heritage Foundation, a leading think tank in Washington, DC  have tracked the march of economic freedom around the world with the influential Index of Economic Freedom

The heritage foundation defines economic freedom as: 

… the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.

Aside from Denmark and Switzerland, no country on the European continent is more conducive to doing business.