BRITAIN has slipped back in the global league of business-friendly economies as the world enjoys an unprecedented era of market reform, according to a World Bank report.

The UK was named as the sixth-best place in the world to start and run a business, a notch down from the fifth place that it achieved last year in the annual study.

Hong Kong, part of communist-run China since 1997, has overtaken its old colonial ruler in inward investment. It swapped places with Britain thanks largely to new rules protecting investors and encouraging trading across borders.

In the report Doing Business 2007, the World Bank encourages countries to pursue market-based reforms to make it easier to start a business, employ workers, register property and enforce contracts.

Despite reforms to strengthen the accountability of company directors and to tighten corporate governance, Britain is failing to keep pace with global change, according to Caralee McLiesh, one of the report’s co-authors.

“The pick-up of reform in the UK has just not been the same as in many other countries,” she said.

The top economies for ease of doing business were named as Singapore, New Zealand, the United States and Canada, but the World Bank said that other countries were catching up fast.

Georgia was named the most successful reformer, rising to 37th place from 112th last year. A string of changes introduced there included cutting by 90 per cent the capital requirement for starting a new business and making labour rules more flexible.

Romania leads the field of Eastern European countries pursuing deregulation as part of an effort to join the European Union. Croatia, Bulgaria and Serbia were also praised for their success in improving the environment for business.

The report paints an optimistic picture of Africa, the world’s poorest continent. Two thirds of African countries made at least one business-friendly reform last year, it says. In Ivory Coast, registering property took 397 days in 2005, because of a law requiring ministerial consent to transfer land. The law has been scrapped and the process now takes 32 days.

China rises in the league from 108th place to 93rd, making it one of the ten strongest reformers in the world.

Several countries, including Venezuela, Uzbekistan and Eritrea, went backwards significantly, the report says.

WORLD OF DIFFERENCE

Top five easiest economies in which to do business

1 (2 last year) Singapore

2 (1) New Zealand

3 (3) United States

4 (4) Canada

5 (6) Hong Kong

The five worst places for ease of doing business

175 (175) Dem Rep of Congo

174 (174) East Timor

173 (173) Guinea-Bissau

172 (172) Chad

171 (169) Congo-Brazzaville

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