Hacking scandal set to diminish UK Plc

Every year Transparency International publish their Corruption Perception Index. It’s a guide to bribery and graft in every country in the world and based on information from respected organisations such as the World Bank, EU, OECD etc.

For reference purposes, the Index top spot or least corrupt country in the world, usually goes to Canada, New Zealand or a Scandinavian country with Denmark number One as we speak.

Last year Britain came 20th in the world but as recently as 2006, it was 12th.

I’ve spoken to the UK head of TI and he told me that the recent phone hacking and police corruption scandal would almost certainly have a negative impact on Britain’s rating when the next Index is published in November.

This matters since Multi National Corporations (MNCs) look at a whole host of factors before they decide where to open (or close) a factory or investment hub. They look at the obvious stuff such as talent pool, tax rates, transport links, wage costs etc etc. But these highly mobile MNCs also look at esoteric and intangible stuff such as quality of life and the degree of corruption.

If an MNC sees that British police like a quick backhander every now and then or company executives might have their private conversations listened to by nefarious and (hither to) politically unaccountable newspapers, they may just think twice before they park their billions in Blighty.

If Britain was to drop 20 places in the next TI index, it would in theory be more corrupt than Bhutan, Botswana and Mauritius. 19 European countries would stand above it!

This means that UK Inc could suffer in Pound, Euro and Dollar terms when it’s trying to get its record deficit down to a manageable level by encouraging people to invest there.

Here’s the latest survey: http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results

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About BBC Joe Lynam

BBC Business Correspondent covering banks, economy, companies, credit, management, tech, IT, government, markets etc. This is my private Blog and and such doesn't necessarily represent the views of the BBC
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