1_ United Kingdom
United Kingdom
•GDP: $2,629 B
At a Glance
GDP Growth: 1.8%
GDP per Capital: $39,900
Trade Balance/GDP: -4.4%
Population: 64.8 M
Public Debt/GDP: 89%
Unemployment: 4.9%
Inflation: 0.7%
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Profile
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The UK, a leading trading power and financial center, is the third largest economy in Europe after Germany and France. Agriculture is intensive, highly mechanized, and efficient by European standards, producing about 60% of food needs with less than 2% of the labor force. The UK has large coal, natural gas, and oil resources, but its oil and natural gas reserves are declining; the UK has been a net importer of energy since 2005.
Services, particularly banking, insurance, and business services, are key drivers of British GDP growth. Manufacturing, meanwhile, has declined in importance but still accounts for about 10% of economic output. In 2008, the global financial crisis hit the economy particularly hard, due to the importance of its financial sector. Falling home prices, high consumer debt, and the global economic slowdown compounded Britain's economic problems, pushing the economy into recession in the latter half of 2008 and prompting the then BROWN (Labour) government to implement a number of measures to stimulate the economy and stabilize the financial markets. Facing burgeoning public deficits and debt levels, in 2010 the then CAMERON-led coalition government (between Conservatives and Liberal Democrats) initiated an austerity program, which has continued under the new Conservative majority government. However, the deficit still remains one of the highest in the G7, standing at 4.1% of GDP as of mid-2016, and Britain has pledged to lower its corporation tax from 20% to 17% by 2020. Britain had a debt burden of 92.2% GDP at the end of 2016. While the UK is one of the fastest growing economies in the G7, economists are concerned about the potential negative impact of the UK’s vote to leave the EU. The UK has an extensive trade relationship with other EU members through its single market membership and economic observers have warned the exit will jeopardize its position as the central location for European financial services.
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Rankings
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• Trade Freedom : 17
• Monetary Freedom : 25
• Property Rights : 13
• Innovation : 12
• Technology : 4
• Red Tape : 13
• Investor Protection : 10
• Corruption : 10
• Personal Freedom : 1
• Tax Burden : 23
New Zealand
GDP: $182 B
At a Glance
• GDP Growth: 3.6%
• GDP per Capital: $39,400
• Trade Balance/GDP: -2.8%
• Population : 4.5 M
• Public Debt/GDP: 33%
• Unemployment: 5.1%
• Inflation: 0.6%
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Profile
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Over the past 40 years, the government has transformed New Zealand from an agrarian economy, dependent on concessionary British market access, to a more industrialized, free market economy that can compete globally. This dynamic growth has boosted real incomes, but left behind some at the bottom of the ladder and broadened and deepened the technological capabilities of the industrial sector. Per capita income rose for 10 consecutive years until 2007 in purchasing power parity terms, but fell in 2008-09. Debt-driven consumer spending drove robust growth in the first half of the decade, fueling a large balance of payments deficit that posed a challenge for policymakers. Inflationary pressures caused the central bank to raise its key rate steadily from January 2004 until it was among the highest in the OECD in 2007 and 2008. The higher rate attracted international capital inflows, which strengthened the currency and housing market while aggravating the current account deficit. Rising house prices, especially in Auckland, have become a political issue in recent years, as well as a policy challenge in 2016 and 2017, as the ability to afford housing has declined for many. The economy fell into recession before the start of the global financial crisis and contracted for five consecutive quarters in 2008 and 2009. In line with global peers, the central bank cut interest rates aggressively and the government developed fiscal stimulus measures. The economy pulled out of recession in 2009, and achieved 2%-3% growth from 2011 to 2016. Nevertheless, key trade sectors remain vulnerable to weak external demand and lower commodity prices. In the aftermath of the 2010 Canterbury earthquakes, the government has continued programs to expand export markets, develop capital markets, invest in innovation, raise productivity growth, and develop infrastructure, while easing its fiscal austerity. Expanding New Zealand’s network of free trade agreements remains a top foreign policy priority.
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Rankings
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Trade Freedom : 13
Monetary Freedom : 2
Property Rights : 1
Innovation : 20
Technology : 13
Red Tape : 1
Investor Protection : 2
Corruption : 1
Personal Freedom : 1
Tax Burden : 9
Netherlands
GDP : $778 B
At a Glance
• GDP Growth: 2.2%
• GDP per Capital: $45,300
• Trade Balance/GDP: 8.5%
• Population: 17.1 M
• Public Debt/GDP: 62%
• Unemployment: 5.9%
• Inflation: 0.1%
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Profile
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The Netherlands, the sixth-largest economy in the European Union, plays an important role as a European transportation hub, with a persistently high trade surplus, stable industrial relations, and low unemployment. Industry focuses on food processing, chemicals, petroleum refining, and electrical machinery. A highly mechanized agricultural sector employs only 2% of the labor force but provides large surpluses for food-processing and underpins the country’s status as the world’s second largest agricultural exporter.
The Netherlands is part of the euro zone, and as such, its monetary policy is controlled by the European Central Bank. The Dutch financial sector is highly concentrated, with four commercial banks possessing over 80% of banking assets, and is four times the size of Dutch GDP. In 2008, during the financial crisis, the government budget deficit hit 5.3% of GDP. Following a protracted recession from 2009 to 2013, during which unemployment doubled to 7.4% and household consumption contracted for four consecutive years, economic growth began inching forward in 2014. Since 2010, Prime Minister Mark RUTTE’s government has implemented significant austerity measures to improve public finances and has instituted broad structural reforms in key policy areas, including the labor market, the housing sector, the energy market, and the pension system. In 2016, the government budget returned to a surplus of 0.3% of GDP, with economic growth of 2.1%, and GDP per capita finally surpassed pre-crisis levels. The Dutch government projects steady but modest economic growth of 2.1% in 2017 and unemployment decreasing to 4.9%.
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Rankings
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• Trade Freedom : 17
• Monetary Freedom : 15
• Property Rights : 9
• Innovation : 6
• Technology : 3
• Red Tape : 19
• Investor Protection : 60
• Personal Freedom : 1
• Tax Burden : 20
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