Currently, the index ranks the UK among the top five countries when measured on macroeconomic stability and enterprise, however on skills, innovation and tax/regulation, the UK is significantly lower in the rankings. The index also provides future predictions assuming a continuation of trends and this is where the UK faces challenges, potentially dropping out of the top 10 by 2010.

David Owen, Deloitte partner noted that: "Despite a strong performance when benchmarked against the world’s most competitive countries, the Deloitte Competitiveness Index’s underlying trends illustrate that the UK risks a fall in the rate of growth of GDP and deceleration of wealth creation. What needs to be recognised now is that business leaders and Government have tremendous power to force positive change to reverse the potential slide.

Further report analysis shows that the US is at the top of the league table with a strong performance across all sectors with a particular strength as 3.2% of its GDP is invested in R&D. Nordic countries Sweden, Finland and Denmark followed closely behind with strength in innovation and investment, while Germany was placed 5th in the ranking owing to its strong innovation base, enterprise and investment environment.

In emerging countries, South Korea is the front runner ranked at 13, followed by India at 22 and China at 24. These countries are all expected to climb the ladder creating a tougher trading environment for continental Europe.

Switzerland was placed ninth as a result of the study, a position which is expected to improve slightly over the next five year. Meanwhile, Ireland was ranked 18th in the league table, but is expected by Deloitte to ascend to eighth by 2010.