Europe is a business friendly place and a lot of nations are vying for top dog. So, let’s take a look at the top countries for business in Europe.
The top performer in Europe is also the the top performer internationally, for the seventh consecutive year they head the Index. Thanks to their strong fundamentals, Switzerland has displayed resilience in the face of crisis, in three of the twelve “pillars” on which the rankings are based, it leads globally and those are — business sophistication, innovation and labor market efficiency —it leads in top ten on ten of those twelve. There are however some challenges that the country faces in order to continue dominated, there is uncertainty about immigration policies in the future as well as a low rate of female participation.
Ireland regularly comes up in the tip countries to do business in a lot of surveys and understandably so. The country has one of the lowest corporation taxes in Europe, something that has seen many large businesses move there, and also an abundance of well trained workers. This has allowed it punch above its weight. However, there is some discord after the recent Apple ruling by the EU so it remains to be seen what the fall out will be.
Up one in fourth overall place, one of the most resilient economies in the last few years has been Germany’s, many of the strong fundamentals which Switzerland has in more compound levels of competitiveness are shared by Germany — those related to innovation, business sophistication, technology and research. The improvement they have made on their position from last year reflects efficiency in the labour and financial markets which has been strengthened — although the labour market is from a low base — and, thanks partially to the government debt being reduced, they have a macroeconomic environment which has improved.
Hitting its best position so far in fifth of the rankings overall, thanks to small yet generalized improvements, the Netherlands gains three places on last year. The Dutch economy is innovative and sophisticated, with a goods market that is open and efficient and displays strength in the pillars of infrastructure, education and institutions. Labor market rigidities as well as a financial market which has not yet recovered from the crisis are its weaknesses.
Stepping down four slots into eight overall, the relatively undiversified economy in Finland has suffered from traumas to the papers industries and the information technology as well as Russia’s recession, this is one its biggest export markets. Last year its GDP was still six percent off its 2008 levels. However, it still contains some fundamentals which are strong, these are characterized by an excellent educational system, strong institutions and a great capacity for innovation. In order to arrest it slide in the rankings overall it must fix a public deficit, which is growing as well as long standing rigidities in their labour market.
Sweden’s institutions, typically for Scandinavia, are efficient and transparent; combining its sophisticated business, excellent educational system and wide penetration of ICTs which creates an environment that is conducive to innovations. The two main concerns which executives doing business in Sweden should consider are tax rates, which continue to by international standards to be high and although mitigated by good relationships between employers and employees, they do have restrictive labour regulations.
The United Kingdom
Although there have been improvements, in this year’s rankings, the UK slips behind Sweden, their main weak spot being macroeconomic — the deficit in the government is still quite high at nine percent of the GDP. On the bright side, conditions in which their service sector can flourish have been created by the country, this will also establish London as the leading startup and tech hub.
In the overall index, Norway has ranked eleventh for the third year in a row, one of the most stable macroeconomic environment globally is said to be found in Norway; on the pillars of higher education and training, financial market development, institutions, technological readiness and labour market efficiency, it registers top ten scores. Some elements of the pillars of market efficiency such as wage determination mechanisms which are inflexible and tax rates which are relatively high overall as well as infrastructure, particularly roads and railroads are some of its weakest points.
A strong education (ninth) and a flexibility in the labour market (tenth) is what Denmark benefits from. If you really look at the indicators for education, there is more that must happen in order to address the quality of an education system which is higher. Their relatively weaker performance in infrastructure (twenty second) as well as financial and good market efficiencies where they rank twenty seconds and twentieth respectively, is what they must address. Executives who took part of the Executive Opinion Survey, which is part of the Index. found that the rates as well as complexity of tax to be their two main concerns.
In the last four years, Belgium has dropped four places ranking in nineteenth overall of the index this year. Public services are its biggest strengths — the country ranks top tens in the pillars of higher education and training and health and primary education. Labour market efficiency and macroeconomic environment are its weakest pillars, although over the last year there has been a slight improvement in both areas. A concern is expressed about the financial market, especially it’s confidence and trustworthiness. In the innovation and business sophistication pillars, the country outperforms their overall rating, however they have dropped two and three places in those areas this last year.
To round up Europe’s top ten and the overall top twenty, in the technological and readiness pillar, Luxembourg is in the lead. The combine techniques such as penetrating the internet with use of innovations in the private sector. In the pillars of institutions and goods market efficiency, they also make it in the top ten. As opposed to their neighbor Belgium, two of their weakest pillars are higher education and health and primary education; the biggest concern which executives expressed for conducting business, was their inadequate education of the workforce.