The World Economic Forum has demoted the United States in its ranking of economic competitiveness, explaining that spiraling debt and persistent budget shortfalls forced the downgrade. Switzerland now holds the top spot, followed by much of Scandinavia.
Although the US remained the global engine of technology, WEF said its business environment was being endangered by the fragile state of its public finances.
The US has seen its budget and trade deficits spiral in the past few years as a result of heavy government spending and rising trade imbalances with countries such as China and Japan.
The US trade deficit is expected to top last year’s record level of $717bn (378bn; 565bn euros) in 2006, while the budget shortfall, although expected to be significantly lower than last year, is still forecast to be close to $300bn.