A survey of 117 countries published today found that the UK had the 13th most competitive economy in the world last year, a drop of two places from 2003. It was overtaken by Australia, the Netherlands and Iceland, according to the Global Competitiveness Report by the World Economic Forum, the Swiss-based think-tank.
The study, which involved 11,000 business leaders worldwide, found that 15 per cent believed the workforce "inadequately educated", while a similar number bemoaned tax regulations, poor infrastructure and government bureaucracy.
The report was seized on by the Conservatives, who said that the UK had "plummeted" from 4th to 13th since Labour won power in 1997. George Osborne, the shadow Chancellor, said: "Gordon Brown's eight years as Chancellor have suffocated the economy through persistent meddling, ever higher and more complex taxes and red tape. As a nation we are not saving enough while government borrowing is excessive."
But the Treasury said the report showed UK was the best performing economy in the EU out of the four European members of the Group of Seven (G7) rich nations. It said: "The UK economy is - as the WEF concludes - 'well positioned to rise to the challenges of increased international competition from India and China'."
In its report the WEF said that the UK had "world class institutions, low levels of corruption and an effective regulatory environment".
Finland topped the table, followed by the US. Four other Nordic nations - Sweden (3rd), Denmark (4th), Iceland (7th) and Norway (9th) made the top 10, along with Taiwan (5th), Singapore (6th), Switzerland (8th) and Australia (10th).