The UK’s economic freedom has bounced back after unprecedented restrictions during the Covid-19 pandemic, according to an index produced by the Fraser Institute and co-published today with the free market think tank the Institute of Economic Affairs.
The report finds that the UK’s economic freedom ranking overtook countries like Japan, Canada, and the Czech Republic. However, the UK’s overall economic freedom is in decline compared to pre-pandemic. In 2021, the UK scored 8.01 out of 10 on the economic freedom indicator, compared to 8.20 in 2019 and 8.65 in 2000.
The report finds that Britain’s business, labour market and financial regulations are becoming increasingly burdensome. With taxes and spending approaching a post-war high, the UK’s score on the size of government has also fallen since 2019.
If the UK scored as highly as it did before COVID-19, it would have placed fifth on the latest ranking, above countries like the United States, Ireland, and Australia.
Across the globe, Hong Kong has lost its place as the freest economy in the world for the first time. This results from declining scores on international trade, the rule of law, and the size of government since Chinese intervention in the region increased towards the end of the 2010s.
The number one spot is now occupied by Singapore, followed by Hong Kong, Switzerland, New Zealand, the United States, Ireland, Denmark, Australia, the United Kingdom, and Canada. Venezuela once again ranks last. Some despotic countries, such as North Korea and Cuba, can’t be ranked due to lack of data.
Alexander Hammond, IEA Free Trade Fellow and author of chapter five of the report, said, “While it is excellent news that the UK climbed the rankings by seven places between 2020 and 2021, much of this increase can be attributed to Britain easing its COVID restrictions sooner than many of its counterparts.
“The UK’s overall economic score remains below its 2019 level and significantly behind the all-time highs we achieved in the early 2000s.
“Perhaps most alarming is that the UK’s score in ‘Size of Government’ and ‘Regulation’ has declined significantly since 2019. This indicates that an independent British state, free from Brussels’ oversight, has become larger and more bureaucratic.”
Matthew Mitchel, Fraser Institute Senior Fellow added, “Hong Kong’s recent turn is an example of how economic freedom is intimately connected with civil and political freedom.
“The Chinese government’s aim was to crack down on political and civil dissent. These repressions, combined with the government’s efforts to control the private sector, inevitably led to diminished economic freedom. Hong Kong’s prosperity will likely suffer as a result.”