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Infrastructure gap to hinder UK’s growth potential

Infrastructure gap to hinder UK’s growth potential

Released today, KPMG’s 2019 edition of the Growth Promise Indicators (GPI) index ranks 180 countries to assess their productivity potential, rating them from zero to 10, based on 26 indices. The report finds that the UK has dropped a place from last year to 13th, just behind Ireland.

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  • UK slips one place to 13th of 180 countries, behind Germany and Ireland in Growth Promise Indicators index
  • Increased devolution, and a bigger focus on transport and education seen as key to bolster UK potential 
  • Western European countries make up 7 of the world’s 10 most promising economies

Released today, KPMG’s 2019 edition of the Growth Promise Indicators (GPI) index ranks 180 countries to assess their productivity potential, rating them from zero to 10, based on 26 indices. The report finds that the UK has dropped a place from last year to 13th, just behind Ireland.

The UK’s growth potential continues to be hampered by poor performance in terms of trade, quality of transport infrastructure and education, compared to its Western European peers, such as the Netherlands. Transport infrastructure in particular is a hindrance, with the UK ranked 18th overall in this category, behind the US, France and Germany.

The GPI also points out that the UK’s macroeconomic stability is lagging in comparison to other European countries including Denmark and Ireland, indicating that the scope for the government to increase spending substantially may be limited. Conversely, the UK is well positioned to capitalise on technological innovation, ranking among the global leaders in technology readiness and business rights.

Globally, Switzerland leads the way at the top of the GPI, followed by the Netherlands and Singapore. Elsewhere in the top 10, Luxembourg and Finland have leapfrogged Norway while this year’s ranking has also seen Mauritius, the Bahamas and South Korea make significant ground.

Yael Selfin, Chief Economist at KPMG in the UK and author of the report, said:

“Despite Brexit and on-going political uncertainty, the UK needs to encourage a dialogue between government and business to improve its long-term productivity. Failing to make this a key priority will leave the economy struggling to reach its full growth potential. If the next UK prime minister hopes to ramp up spending, he needs to find a balance between long-term macroeconomic stability and sustainable growth, ensuring every penny is well spent.

"The index shows that globally, the top performing countries that have been able to lay the foundations for solid growth are the ones to follow. Asia has one in the top five GPI ‘league table’, with Singapore in third place; while Europe has the remainder. Smaller nations, such as South Korea and the UAE, are also moving quickly up the rankings, while developing economies are often making progress faster than their developed counterparts.”

Strong institutions help Europe lead global rankings

The report highlights the importance of strong institutions and their role in promoting sustainable economic growth. The UK generally performs strongly in this area and ranks 12th overall, with Finland top.

Yael Selfin, Chief Economist at KPMG in the UK and author of the report, added:

“One aspect where the UK could improve its ranking in this area is transparency of policymaking, where there is a sense across business that the UK is lacking a long term vision for the economy, which is hindering business investment. This is where a robust regional strategy supported by a strong devolution agenda may help.”

Many countries still lag behind when it comes to strong institutions, and as the report makes clear, better performance in this area can trigger much wider improvements that lay the groundwork for future growth, at a relatively low cost.

- Ends - 

For further information please contact:

KPMG Press office

T:  +44 (0) 207 694 8773

Riku Heikkila, Kekst CNC

M: +44 (0)7976 326 263

E: riku.heikkila@kekstcnc.com

Notes to editors:

The Growth Promise Indicator (“GPI”) 2019 edition was first developed in 2014. The GPI report comprises 26 individual GPI series selected to assess countries’ productivity potential, based on relevant academic studies and business survey results. KPMG have covered 180 countries and tracked their performance since 1997. The data indicators are grouped into five key GPIs:

  • • Macroeconomic stability
  • • Openness to catch-up
  • • Quality of infrastructure
  • • Human development
  • • Quality of institutions

For each series, a higher value (from zero to 10) denotes a strictly better outcome for the country. 

Weights used to aggregate the series, sub-series and pillars were derived using the results of econometric analysis in conjunction with the results of previous studies and business survey outputs.

The weights are fixed between different countries and over time.

 

GPI “league table”

 Infrastructure gap to hinder UK’s growth potential

See Appendix 2 of the GPI report for a full listing and additional underlying scores. The top 20 nations and their GPI score are ranked below:

A full breakdown of constituent parts in each GPI indicator.

Infrastructure gap to hinder UK’s growth potential

About KPMG:

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 16,300 partners and staff.  The UK firm recorded a revenue of £2.338 billion in the year ended 30 September 2018. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

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