When it comes to business, Ireland is firmly more competitive than the United Kingdom. This is according to a new report released by the IMD World Competitiveness Center and first discussed on the Irish Independent.
Ireland Jumps Nine Positions in Just One Year
Based out of Switzerland, the IMD study ranks the business environment according to competitiveness. In just the course of one year, Ireland managed to jump from 16th place to 7th. This is a considerable step above the UK, which is ranked 18th.
These findings are in stark contrast to claims made by many businesses in the UK. Business leaders in the UK have repeatedly claimed that the UK offers a more competitive economy thanks to UK tax offerings. Though, there is more to this study than the tax environment.
A Wide Range of Metrics Is Used to Determine Rankings
Along with business tax, the study looked at a wide range of metrics to determine the rankings. They also looked at the overall health of the market and economy, business regulations, electricity rates, and petrol prices.
When examining the findings of this study, the IMD found that the GDP, government finances, and banking regulations have all improved in Ireland since last year. Though, there were also some negative issues. This includes education spending, the flexibility of the exchange rate, the amount of women that have degrees, and the rates for personal income tax.
IMD uses a variety of factors, in addition to the metrics listed above. They use hard data to calculate rankings. This information is gathered from a variety of sources. Sources include the OECD, the World Bank, and the authorities in each country. They also pulled soft data from interviews with top executives in each of the countries ranked.
The Top Indicators of an Attractive Business Environment
When interviewing the top executives, IMD had the executives list 5 indicators of an attractive business environment. These 5 indicators must be selected from a group of 15.
In Ireland, executives often listed the competitive tax regime as the number one sign of a competitive business environment. This was followed by education, a skilled workforce, and a friendly environment for businesses.
At the bottom of the list of indicators is the state of the government. When the government remains pro-business, then executives do not consider it a major factor in establishing a competitive business environment.
Eastern European Countries are on the Rise
Professor Arturo Bris, who is the director at the IMD, commented that Ireland’s ranking was definitely among the largest increases seen in Europe. The Netherlands and Ireland both showed the largest jumps. But, they were not alone.
Belgium, Italy, Spain, and Sweden also improved compared to last year’s rankings. In Eastern Europe, Latvia, Slovenia, and the Slovak Republic all saw improved economies.
In fact, these three countries are considered as some of the fastest-growing economies. All three climbed six places, with Latvia reaching 37th, Slovenia reaching 43rd, and the Slovak Republic climbing to the 40th position. While those three Eastern European countries saw an improvement, they are still below Italy, France, and Spain – 35th, 32nd, and 34th positions.
When it comes to the countries that managed to reach the top twenty, there was a common pattern. All of the top countries enjoy business-friendly regulations.
The Eastern European countries mentioned are aware of this and appear to be following the lead set by those in the top twenty – including Ireland. If this trend continues, then several of these Eastern European countries could continue to climb in the foreseeable future.
The United States is No Longer in the Lead
While Ireland saw a jump in the rankings, the United States has finally given up their ranking as the most competitive business environment. That honor now goes to China, with Switzerland and Hong Kong also surpassing the USA.
Though, China and other Asian markets have noticed a decline. Despite the slowdown in the Chinese economy and other parts of Asia, some countries in the region have climbed. Singapore and Hong Kong have managed to buck the trend and appear to be on the rise.
Other notable changes in the last year include lower rankings for the Korea Republic, Indonesia, Malaysia, and Taiwan. Throughout Asia, only China managed to remain in the list of top 25 countries. This comes as the country has been struggling to maintain economic growth after nearly a decade of record-setting development.
The IMD World Competitiveness Center is a research group based out of Switzerland. They are a part of the IMD business school and have released these rankings every year since 1989.
Ireland is ranked at 7th, which is a major jump over last year’s 16th place ranking. This also pulls them further ahead of the UK. Hopefully, Ireland will see an even bigger increase when next year’s report is released.
With the Brexit referendum settled and the UK set to leave the EU sometime in the near future, how will this affect competition? Companies such as Advance Systems, a Time and Attendance Company, maintain that such an exit will actually increase opportunity for them with more global organisations entering Ireland.
