September 11, 2012
BRUSSELS , SEPT. 11, 2012— Europe’s continuing failure to remedy massive government over-spending and indebtedness remains the principal threat to its economic freedom, according to Heritage Foundation Research Fellow James Roberts. The economist delivered this assessment here at the 9th annual European Resource Bank (ERB), a conference of academics and officials from dozens of free market think tanks from across the continent.
Drawing heavily from data compiled in the 2012 Index of Economic Freedom, published annually by The Wall Street Journal and The Heritage Foundation, Roberts acknowledged that Europeans generally enjoy greater economic freedom than people in most other regions of the world, thanks largely to strong showings in categories such as protection of property rights and freedom from corruption. But, he noted, heavy taxation and excessive government spending leaves Europe ranked last among six regions in the world in the categories of fiscal freedom and government spending.
The 2012 Index ranked nine European economies among the world’s 20 freest. Switzerland ranked fifth and Ireland ninth in the world. After implementing austerity measures and tax cuts, Great Britain climbed back into the Top 15, and Iceland also registered an impressive improvement in the ratings.
But Greece – where a sovereign debt crisis rages – recorded the largest ratings drop in the world. The Index now classifies its economy as “mostly unfree.” Eight other European nations—Denmark, Luxembourg, Estonia, Finland, Cyprus, Norway, Slovakia and even still high-flying Ireland—experienced significantly lower ratings as well.
Overall, Roberts said, economic freedom on the continent remains pretty firmly grounded… for now. That’s good news, he noted, because economic freedom is highly correlated with greater prosperity, greater economic growth, greater environmental quality and many other socially desirable outcomes. However, he warned, economic freedom must be constantly defended, and in Europe that means tamping down runaway governmental spending and borrowing.