Labour’s hard-won credentials for economic management will be dealt another blow today as Britain’s weakening international performance is blamed for it slipping down a global league table of competitiveness.

With the Government under fire over the economy, its reputation for sound stewardship of the country’s prosperity is being called further into question by its latest slide in rankings of 55 industrial and emerging market nations from a respected international business school.

The league table drawn up by the Lausanne-based Institute for Management Development (IMD) shows Britain losing ground in the global economic race for a third year in a row.

In an annual assessment of national competitiveness released this morning, the UK falls one place from twentieth, to twenty-first, having been overhauled by Israel. The United States, Hong Kong and Singapore take the top three places in the league for a second year.

In a bigger blow to the Government, Britain’s overall relegation comes as the IMD analysis downgrades its showing on the key factor of economic performance against global rivals from seventh out of 55 countries to sixteenth.

That finding will dismay Alistair Darling at a time when the Chancellor is trying to fend off a ferocious business backlash over corporate tax and has been forced to execute a series of embarrassing U-turns over key proposals for changes to the regime, from capital gain levies to the taxation of foreign profits.

It echoes the verdict of other respected international think-tanks and institutes, which have downgraded Britain’s competitiveness recently and sounded warnings over its rising tax burden and worsening business environment. In November, those issues were blamed by the World Economic Forum for Britain’s plunging from second to ninth place in its rival scoreboard of the world’s most competitive and dynamic economies.

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