I want to give our millions of small businesses the competitive advantage in Europe

Nigel Griffiths Small business minister

It found British firms topped the league, scoring the highest marks in 20 out of 70 categories.

British businesses emerged as having the highest pre-tax profit margin of all nine countries.

UK manufacturers in this country were found to be least likely to go bust, because they had enough liquid assets to cover their liabilities if creditors called in their debts.

But the UK service sector fared less well, with firms in this area considered to be the most likely in Europe to run into problems.

Many suffered because they did not have sufficient assets to cover liabilities if their debts were called in.

Defective goods

German companies emerged as having the highest number of complaints, while British ones had the least. German employees took the most sick days.

According to the report Italian companies were least likely to send out defective goods, while British firms emerged as least likely to plough turnover back into the company.

The report, which was carried out by the Small Business Service, part of the DTI, aims to help firms compete better in Europe by comparing strengths and weaknesses.

Small business minister Nigel Griffiths said: "I want to give our millions of small businesses the competitive advantage in Europe.

"This report gives them a unique opportunity to do that by comparing themselves to their international competitors."