A couple of spreadsheets can easily explain why QE and negative interest rates cannot possibly fix what ails the EU. The same spreadsheets show why the UK was smart to Brexit.
Ease in Doing Business – UK vs. Rest of Europe (Not Just EU)
| Economy | Ease of Doing Business Rank | Ease in Starting a Business |
|---|---|---|
| United Kingdom | 6 | 17 |
| Sweden | 8 | 16 |
| Norway | 9 | 24 |
| Finland | 10 | 33 |
| Germany | 15 | 107 |
| Estonia | 16 | 15 |
| Ireland | 17 | 25 |
| Iceland | 19 | 40 |
| Austria | 21 | 106 |
| Latvia | 22 | 27 |
| Portugal | 23 | 13 |
| Poland | 25 | 85 |
| Switzerland | 26 | 69 |
| France | 27 | 32 |
| Netherlands | 28 | 28 |
| Slovak Republic | 29 | 68 |
| Slovenia | 29 | 18 |
| Spain | 33 | 82 |
| Czech Republic | 36 | 93 |
| Romania | 37 | 45 |
| Bulgaria | 38 | 52 |
| Croatia | 40 | 83 |
| Hungary | 42 | 55 |
| Belgium | 43 | 20 |
| Italy | 45 | 50 |
| Cyprus | 47 | 64 |
| Turkey | 55 | 94 |
| Greece | 60 | 54 |
| Luxembourg | 61 | 80 |
Ease in Doing Business – Global Top 20
| Economy | Ease of Doing Business Rank | Ease in Starting a Business |
|---|---|---|
| Singapore | 1 | 10 |
| New Zealand | 2 | 1 |
| Denmark | 3 | 29 |
| Korea, Rep. | 4 | 23 |
| Hong Kong SAR, China | 5 | 4 |
| United Kingdom | 6 | 17 |
| United States * | 7 | 49 |
| Sweden | 8 | 16 |
| Norway | 9 | 24 |
| Finland | 10 | 33 |
| Taiwan, China | 11 | 22 |
| Macedonia, FYR | 12 | 2 |
| Australia | 13 | 11 |
| Canada | 14 | 3 |
| Germany | 15 | 107 |
| Estonia | 16 | 15 |
| Ireland | 17 | 25 |
| Malaysia | 18 | 14 |
| Iceland | 19 | 40 |
| Lithuania | 20 | 8 |
Ease in Starting a Business – Global Top 20
| Economy | Ease of Doing Business Rank | Ease in Starting a Business |
|---|---|---|
| New Zealand | 2 | 1 |
| Macedonia, FYR | 12 | 2 |
| Canada | 14 | 3 |
| Hong Kong SAR, China | 5 | 4 |
| Armenia | 35 | 5 |
| Georgia | 24 | 6 |
| Lithuania | 20 | 8 |
| Singapore | 1 | 10 |
| Australia | 13 | 11 |
| Belarus | 44 | 12 |
| Portugal | 23 | 13 |
| Malaysia | 18 | 14 |
| Estonia | 16 | 15 |
| Sweden | 8 | 16 |
| United Kingdom | 6 | 17 |
| Slovenia | 29 | 18 |
| Belgium | 43 | 20 |
I created the tables from a subset of “Ease of Doing Business Rankings”.
Congratulations to New Zealand!
Congratulations are due New Zealand for ranking number 1 globally in starting a business and #2 globally for ease in doing business.
Corporate Tax Rates
Widely varying corporate tax rates are another piece of the EU trouble puzzle.
Let’s review Stellar Opportunity for UK to Set Example for the World
Let the EU Self Destruct
France and Germany want financial transaction taxes. Let em. It will mean more business for the UK, not less.
France insists on agricultural tariffs. Should the UK care now?
The EU does not like Ireland’s low corporate tax rate so much so that the EU is Considering a Minimum Corporate Tax.
Should the EU insist on such silliness, it will drive business to the UK, not away from London.
Trade War the Right Way
The UK should preemptively stick it to the EU by slashing its corporate tax rate to 10%, lower than any country in the EU.
European Corporate Tax Rates
| Country | Corporate Tax Rate % | Highest | Lowest |
|---|---|---|---|
| Austria | 25 | 55 | 25 |
| Belgium | 33 | 48 | 33 |
| Bulgaria | 10 | 40.2 | 10 |
| Croatia | 20 | 20.32 | 20 |
| Cyprus | 12.5 | 29 | 10 |
| Czech Republic | 19 | 45 | 19 |
| Denmark | 23.5 | 50 | 23.5 |
| Estonia | 20 | 26 | 20 |
| Finland | 20 | 61.8 | 20 |
| France | 33.3 | 50 | 33.3 |
| Germany | 29.65 | 56.8 | 29.4 |
| Greece | 29 | 49 | 20 |
| Hungary | 19 | 50 | 16 |
| Ireland | 12.5 | 50 | 12.5 |
| Italy | 31.4 | 53.2 | 31.4 |
| Latvia | 15 | 29 | 15 |
| Lithuania | 15 | 20 | 15 |
| Luxembourg | 29.22 | 40.29 | 28.6 |
| Malta | 35 | 35 | 35 |
| Netherlands | 25 | 48 | 25 |
| Poland | 19 | 40 | 19 |
| Portugal | 21 | 55.1 | 21 |
| Romania | 16 | 38 | 16 |
| Slovakia | 22 | 45 | 19 |
| Slovenia | 17 | 25 | 17 |
| Spain | 28 | 35 | 28 |
| Sweden | 22 | 60.1 | 22 |
| United Kingdom | 20 | 52 | 20 |
| Euro area Average | 24.6 | 36.8 | 24.3 |
| European Union Average | 22.8 | 35.2 | 22.8 |
The above table created from Trading Economics data.
Europeans, Keep Calm, Move to the UK
Image modified from UK Sun article Cheeky Campaign to Steal British Business After Brexit
Economic Madness
Brussels wants Spain, Greece and Italy to balance the budget by raising taxes. Meanwhile the ECB punishes savers with negative rates.
One look at the first set of spreadsheets is all you need to know what ails France, Spain, Italy, and Greece.
France is a socialist madhouse of anti-business rules, Italy is a competitive basket case, and Greece is towards the bottom on the European barrel on everything.
Monetary policy cannot fix productivity issues, or structural flaws in the euro itself, but the ECB insists anyway. For details, please see Dear ECB, What’s in Your Wallet?
Mike “Mish” Shedlock
The most ominous numbers in your report was that the US is 49 in starting a new business, much worse than the US ranking in doing business.
That says to me that by making it harder to start something new, that benefits the existing entities. That was and still is true in all of Europe.
The key to economic growth is that more new starts and old ceases to exist. For the first time ever more US companies are shutting their doors then are starting up.
Hence the rise of Donald Trump and Bernie Sanders here in the US.
America has the highest corporate tax rate in the industrialized world and with obama piling on regulations upon regualtions, makes it very difficult to start a business.
Wonder why jobs there are no jobs…
Indeed. I work in the trade show industry and see small, medium and large business owners from every industry. Many have told me they would never have even started their busines with today’s regulations.
England’s business costs will be a lot higher as soon as Europeans revert back to their wars of conquest..something they have been doing since Helen of Troy deserted her hubby.
Wars of conquest???
With what?
Germany has only 300 main battle tanks. The PA National Guard has more armor.
The PA National Guard has more armor.
Is that Pennsylvania or Palestinian Authority?
Conquest? Europe is castrated… they are being conquered, not doing the conquering…
Put up another chart with percent of the population that is muslim.
Bombings and mass killings don’t help the business climate.
Hi Mish,
Thanks for your latest info about doing biz in the different countries. You mention also Switzerland on the first list, but you do not mention who gathered this info,
I am surprised to see Switzerland rated as low as this.
It is true, that it can take some time to gather all the authorisations to run a specific type of biz, because Bureaucracy has also had a good run in Switzerland. However, I can assure you that is very easy to found a company here. It must also be said, that each of the 26 Cantons has somewhat different laws for this.
Last but not least, on the list for taxes, Switzerland is not being mentioned, although it is offering attractive rates to International Companies and that is presently in the process to lower the rates to a 12 to 16% rate depending the Canton for all the companies.
Best wishes
RolWal
Mish,
Governments think taking is the only way to receive. What would happen if a a state with good airports roads and train lines dropped their corporate rate to an extremely low rate such as 5% or even zero. Do you believe the revenue in growth would far exceed any taxation. Why has no one tried it to find out.
Because western governments buy votes by giving away free sh*t.
They will never cut government and give up power voluntarily.
Why do you think obama and Hillary want to import as many illegals and muslims as possible?
I’ve launched/op’d businesses (IT) in both europe (NL, DE) & the USA…
Nutshell of my experience:
Europe’s biz climate & rules are geared to discourage small start-ups (innovation) and heavily favor existing (corporate) players. OTOH, adding staff/resources in europe is cheap & easy (although subtracting staff is unbelievably expensive).
Example: want to add more server/rack capacity? You’ll need to ‘collateralize’ those initial boxes (significant/prohibitive capital outlay up front… may as well buy the damn boxes outright and host yourself) before you can leverage/rent further shared capacity from the service provider. Only start-ups w/ million$ in working capital can afford to grow in such an environment.
The US is MUCH more friendly & agreeable for shoestring start-ups, although 1) compliance w/ the retail sales tax environment here in the US has become prohibitively complex, and 2) taxes associated w/ payroll absolutely discourage hiring/growth/entry-level opportunities.
Example: we can easily scale up HW/cloud capacity for pennies on the dollar (cheap server/rack capacity; minimal capital outlay), but if we sell direct to consumers (retail) then we must comply w/ 950+ different local sales tax rates, collections, accounting, etc. And if we need to add a part-time or FT resource, then our cashflow position (viability; $$ out-the-door) becomes unmanageable thanks to quarterly payroll tax requirements + minimum benefits requirements. The US biz (tax) environment discourages ‘national’/pan-american ops (limiting growth) & discourages hiring (limiting growth).
US needs to harmonize a simple, low national sales tax & get rid of the taxes associated with payroll (and income). If this were done, the US would IMMEDIATELY jump to the front of the line per global business & job creation/growth.
I’m in Germany and I would say it’s a miracle that any business, especially a small one starts here. Germany has a nationwide business tax, first introduced locally in 1891 and then nationwide in 1936. It’s a local turnover tax that is a major source of finance for local governments. And just in case some city should get the idea of attracting business with a low tax, there is a mandatory minimum!
Especially burdensome, and this is straight from the Chamber of Commerce brochure for our region here in East Germany: There’s no such direct thing as a wholesale price. When you stock your store you have to pay the Value Added Tax (Mehrwertsteuer). Later as your business grows and you’ve proven you are legitimate, you can apply to the tax office for a refund. The VAT rate in Germany is 19% (7% for food and books), so right off, your business is loaded down with the business tax and VAT tax.
The VAT in Germany applies to everything: services, commercial rentals, lawyers, accountants, restaurant food, car rentals, movie tickets, any and everything you never imagined would be taxed. So when you rent your store or work space the rent includes the 19% VAT. Best of all, the 19% VAT also applies to all the things that the landlords charge separately from the rent: cleaning, heating, property tax etc.
So now you’ve just paid 19% VAT on the heating. Energy costs in Germany are roughly double the U.S. average. You pay about 25 to 30 Euro Cent per Kilowatt. HALF of the energy price consists of taxes on the energy.
Germany never had a minimum wage until January 2015. Germany does not have a national health insurance program. There are about 1,000 companies and it sort of works like workers compensation: There are rules the companies have to follow and different companies can interpret them differently. There is private health insurance but most people opt for the state regulated firms. BTW they are solvent. However, health insurance is mandatory if you live in Germany. As a working person you pay about 15%+ of your salary for the insurance premium and your company pays about 14%.
and on and on it goes….
Maybe you want to bring Mish into your German form as a financial advisor. Sorry, you’ll have to wait an average 18 months to find out if there is a qualified German who should receive the job. The central office of the German Government Employment Agency in Bonn will determine this. I’m not sure what happens if you don’t want to hire the ‘qualified German’ that you’ve never met.
I’m fascinated. The overlap between the top twenty for doing business and my customers for industrial equipment is high. Wow. Just started up a big system in New Zealand. Love those guys.
Maybe the EU Nannycrats can go door to door and FORCE people to start businesses. Wouldn’t that be a boon to the economy?
“Knock, knock!”
“Who’s there?”
“E U!”
“E U who?”
“Hey you, here’s some Euros, get off your fat butt and start a business RIGHT NOW or you’re going to prison!”
Don’t laugh, it’s probably on tap if NIRP doesn’t work. Did I say “if”?
RE: “Ease in Doing and Starting a Business: US and UK vs. Europe, Rest of World” – not too be confused with how easy it is to Stupidly kill your business.
“Twitter Stock Rating Downgraded; WikiLeaks Decries ‘Cyber Feudalism’”
http://www.breitbart.com/tech/2016/07/21/twitter-stock-rating-downgraded-investment-firm/
WikiLeaks Threatens Twitter with Competing Platform After Declaring Support for #FreeMilo
http://www.breitbart.com/tech/2016/07/21/wikileaks-threatens-twitter-with-free-speech-alternative/
94% of British companies do not export into the EU market yet they still have to apply all of the EU’s rules and regulations. So Brexit offers another benefit to those companies.
What goes into “starting a business”? I’ve used those Nevada company websites and started a business in about 10 minutes. It was legit and I got my Tax ID number from the IRS. Are you talking about regulatory compliance? I guess if you have employees you do have to fill out a lot of forms, so I’ll give you that.