UK ranked sixth best for business

UK firms must face the challenge of globalisation

Britain has the world's sixth most competitive economy, but its rank will slip unless tax and red tape is cut and firms boost investment, a survey says.

Consultants Deloitte ranked the UK highly for its economic stability and dynamic business culture but poorly for innovation and investment.

The US, Nordic nations and Germany did best, but the UK beat fellow Group of Seven nations France, Japan and Canada.

Deloitte said the UK could fall to 12th by 2010 if business trends continue.

It said that UK companies need focus on the challenges of globalisation, by relocating parts of their operation outside of the UK if it made economic sense.

Over the next few years, the report predicts a "shift in the global balance of competitiveness" with most mature economies apart from the US dropping down the rankings.

MOST COMPETITIVE ECONOMIES 1. US 2. Sweden 3. Finland 4. Denmark 5. Germany 6. UK 7. Canada 8. Japan 9. Switzerland 10. Austria Source: Deloitte

Emerging economies such as South Korea, India and China are forecast to see big improvements.

The Deloitte report ranked 25 nations using government and European Union competitiveness indicators.

In two other, wider business competitiveness surveys this year, the World Economic Forum ranked the UK 13th and the IMD business school ranked it 22nd.