Britain's burgeoning public sector bureaucracy coupled with large regional economic disparities have caused it to plunge down the global economic competitiveness league since Labour came to power in 1997, according to new research.
The UK Competitiveness Index 2005 report has found that that the UK has slipped from a ranking of 9th position in 1997 to only 17th position by 2004.
The report by Dr Robert Huggins, a Senior Economist at Sheffield University's Management School, claims that "the competitiveness of the UK economy as a whole has been compromised since 1997 by the continued disparities that exist between the nation's leading and lagging regions".
Comparing the competitiveness of UK regions in 1997 and 2005, it finds that the top three positions remain the same as in 1997, with London being followed by South East England in second position and Eastern England in third.
But the relative competitiveness of London has weakened considerably since 1997, resulting in an overall competitiveness score for 2005 that is only very marginally higher than that of South East England.
East England achieved the greatest improved in its relative competitiveness for all UK regions.
The report finds that the competitiveness gap between these four regions and the rest of the UK remains 'unacceptably' wide, with the rate of improvement far below that required to ensure the catching-up of these continually lagging regions.
"Unless this imbalance is rectified, the UK will fall further down the global competitiveness league in coming years, with the competitiveness of most of its regions becoming further beleaguered," Dr Huggins said.
The report is also just the latest to revel how far the continued output growth that the UK has achieved since 1997 has been more than partly due to large increases in public sector employment.
It shows that at a national level, three-quarters (74.5 per cent) of employment growth in the UK between 1997 and 2004 occurred in the public sector.
While the UK's public sector grew by 1.4 million employees between 1997 and 2004, there was an increase of only 481,000 private sector jobs during the same period.
Earlier this year, an analysis of the official Labour Force Survey figures by City broker Williams de Broë found that the increase in public sector employment since 1997 has been significantly larger than the decrease in the unemployment claimant count, which has fallen by 787,000.
The Labour Force figures also showed that a quarter of the UK workforce - almost 7 million people- now work for the state.
According to the Huggins report, "the dominance of public administration as the UK's biggest growth sector, and the increased dependency of our more peripheral and lagging regions on public sector employment, highlights the government's continuing impotency in effectively connecting with and positively influencing the development of business communities across the UK".
From a competitiveness and long-term economic perspective this is worrying, since it is the private sector that is the engine of growth and development" Dr Huggins added.
"Unless this imbalance is rectified, the UK will fall further down the global competitiveness league in coming years, with the competitiveness of most of its regions becoming further beleaguered".
More starting still, in North East England, the East Midlands and the West Midlands there was actually an overall fall in the number of private sector employers, which means that the public sector accounted for all employment growth in these regions.
In Scotland, which saw the introduction of its Parliament during this period, 77.6 per cent of employment growth is accounted for by the public sector. Similarly, in Wales - where the National Assembly has been established - more than one half (55.4 per cent) of employment growth occurred in the public sector.
Only London (53.1 per cent private sector employment growth) and Northern Ireland (65.9 per cent private sector employment growth) saw more jobs growth in their private, rather than their public, sectors between 1997 and 2004.