UK still seen as prime place to do business, say recruiters
Recruiters have given the Coalition government a thumbs-up for their efforts to produce a business-friendly environment, as demonstrated by its scores in an economic index – but a ‘must try harder’ regarding SMEs.
According to the 2013 Index of Economic Freedom, conducted by Washington, DC think-tank Heritage Foundation, the UK has become a better place to do business over the past year, compared to its international competitors. The UK edged up the Foundation’s rankings as its score rose by 0.7 to 74.8, making it the 14th freest economy in the 2013 edition.
Hong Kong topped the table for the 19th consecutive year with a score of 89.3, followed by Australia, New Zealand and Switzerland. The UK performed better against its eurozone competitors, coming fifth ahead of France, Germany, Spain and Italy.
The economic index measures the ease of doing business around the world, reflecting the level of government legislation, the taxation regime, and the levels of corruption, red tape and bureaucracy. However, recruiters who run large international staffing companies warn that legislation such as the Agency Workers Regulations threatens to reverse the good work being carried out by the Coalition government, which could damage the UK’s competiveness.
Ged Mason, chief executive of international technical recruiter Morson Group, tells Recruiter that the UK remains a good place to do business. He says it compares favourably with the Middle East, for example, where having a licence is commonly a prerequisite to doing business.
Mason adds that the UK is also better than Brazil and Colombia, where issues of tax compliance can be problematical. However, he notes that the AWR and auto-enrolment of pensions have increased the UK’s legislative burden.
According to Mason, it is important that the UK remains as business-friendly as possible, as unfriendly business environments inevitably impose heavy costs on business. “These become a burden, and have to be passed on to our engineering and manufacturing companies, thus making it more difficult to compete in export markets,” he says.
Graeme Read, managing director of Antal International tells Recruiter that the UK continues compare favourably on labour flexibility, particularly with the counties in Southern Europe.
“There is a very tight correlation between a beneficial business environment and a flexible labour market,” says Read, who suggests that the government should do more to deregulate the labour market.
Albert Ellis, CEO of international IT recruitment and outsourcing recruiter Harvey Nash, says there are three key areas that illustrate the Coalition’s “direction of travel”.
On the first, rhetoric and the message, Ellis comments, “I feel the government is concerned to promote business, not just in Europe, but also in emerging markets.” On these areas, Ellis gives the Coalition 8/10.
On taxation, Ellis says: “George Osborne’s aim of reducing corporation tax in the low-20s percentage is a huge tick in the box,” comparing favourably with countries such as France and Germany, who appear to be more concerned with raising taxes than company profitability.
“There is a lot of uncertainty in Germany, and unreasonableness in both France and Germany, adds Ellis, who goes on to describe the tax environment for business in Germany as “hostile”.
In contrast, “The UK is not a hostile environment, ” says Ellis. However, the UK government also needs to continue to lower the top rate of personal taxation, which currently stands at 45%. On this score, Ellis gives the government 7/10.
On the UK government’s approach to SMEs, Ellis remains optimistic that, particularly in the technology sector, the government now recognises the importance of SMEs in creating jobs. Ellis awards the government 5/10 in this area.
