The Bank for International Settlements, the central bankers’ organisation, produced its annual report this week. It has already been criticised by some for its recommendations but it’s still worth reading. You may not agree with the conclusions its authors come to but some of the data is interesting nevertheless.
This little chart caught my eye: regulation in a nutshell.
It’s based on some of the OECD data I have referred to before but it neatly shows just how low the UK’s business and employment regulation is, not only compared to other advanced economies but also to the emerging ones.
The BIS says that there is a correlation between growth and low regulation especially for those countries with highly regulated economies. It claims that if countries at the high end were to reduce their level of regulation down to the UK’s, they could increase growth by 0.25 percent annually. Alas, it doesn’t say anything about what to do when you already have one of the lowest levels of regulation in the world and your growth is still crap.
So here, then, is the UK economy. One of the lowest levels of protection for permanent employees, among the weakest protection for temporary workers and the lowest barriers to entrepreneurship of all. Despite that, many of the more heavily regulated countries, even among the lower-growth advanced economies, are still outperforming us.
Next time someone tells you the UK is over-regulated, show them this chart. Whatever hare-brained deregulation schemes the government brings in, be it Beecroft, Bastardised Beecroft, Backdoor Beecroft or plain Barmy Beecroft, none of it will make a scrap of difference to the UK’s growth or competitiveness. Britain is already a low-regulation economy. Almost everyone else has more red-tape than we do. Whatever is holding our economy back, it’s not regulation.