The 2012 Heritage Index of Economic Freedom is released today, and the UK finds itself up two places from 16th to 14th (despite a lower overall freedom score than last year). The Index, which weights measures of government spending, regulatory efficiency, property rights, freedom from corruption and openness of markets, sees the UK's overall score drop 0.4 points to 74.1 out of 100.
Unsurprisingly for those who follow the CPS's work, the effect of increasingly high government spending had the biggest drag on the UK's score. Despite tough rhetoric on spending cuts, the closing of the UK deficit will occur mainly through growth picking up and increasing tax revenues. Indeed, nominal spending will continue to increase by 1.6% on average per year to 2016/17, with the forecast equivalent real-terms cuts just 0.9% per year.
The rise in the ranking relative to other countries therefore largely occurs because of the deterioration of other high-ranking economies. However, there are some areas where the UK continues to perform particularly strongly. The report makes clear that our rule of law, secure property rights and efficient court system enhances our economic propsects. The implementation of the Bribery Act, which came into force in 2011, provides a modern legal framework to combat bribery. Likewise, our regulatory frameworks are stable.
Overall, the message is largely the same as last year. Our economic freedom is mainly hindered by our fiscal situation - and the sooner that is dealt with, the sooner we will get back to a free and prosperous economy.