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Last Updated: Tuesday, 21 March 2006, 17:18 GMT
Singapore 'cheapest for business'
Singapore skyline
Businesses face less costs in Singapore than in other cities
Singapore boasts the lowest business costs of any major industrialised country, according to a new study.

The cost of launching and running a business in Singapore is much lower than in the US, Japan or any major European nation, KPMG found.

This was mainly due to its much lower labour costs, with average wages well below other countries in the study.

France and Italy have overtaken the UK in terms of "cost-competitiveness" since 2004, the study found.

Labour costs key

The bi-annual study - which covers 128 cities in nine countries - is based on the costs of setting up and running businesses across different industries over a 10-year cycle.

The research takes into account key factors such as wages, business taxes, rent, and energy costs.

1: Singapore
2: Canada
3: France
4: Netherlands
5: Italy
6: United Kingdom
7: United States
8: Japan
9: Germany
Source: KPMG-2006

Singapore topped the "cost competitiveness" league after being included in the study for the first time.

Average wages there are considerably lower than in the other countries included in the study, despite the fact that Singapore now boasts GDP per capita equivalent to some European countries.

The study concluded that labour costs are the most important factor for businesses when deciding where to locate their operations, followed by the cost of finding and securing premises and taxes.

What we are really seeing here is the price that the UK is paying for having a successful economy
Ian Barlow, KPMG

Canada was judged the second most competitive country in terms of business costs. The US came seventh while Germany was deemed the least competitive.

The UK lost its position as the most "cost-effective" European country, falling behind both France and Italy.

Not cheap option

KPMG said wage costs were higher in the UK than in France and Italy, a product of its low employment and its skilled workforce.

"What we are really seeing here is the price that the UK is paying for having a successful economy," KPMG partner Ian Barlow said.

"The UK no longer really markets itself as a low cost option to access the European Union market."

Employer groups have called on the British government to reduce the tax burden on companies in Wednesday's budget.

Ahead of the budget, Chancellor Gordon Brown announced he had asked 12 top business leaders to advise the Treasury on improving the UK's competitiveness.

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