International studies rate the UK as having one of the most favourable regulatory regimes for business in the world. In 2005 the OECD ranked the UK second only to Australia with regard to the quality of its product market regulation, while the World Bank placed the UK top among the major economies for regulatory quality.
An assessment of the UK's productivity and competitiveness is reported annually in the Productivity and Competitiveness Indicators. This reveals that the UK's light-touch product market regulation makes the UK an attractive place for foreign investors: it has the highest stock of inward investment of any G7 country, as a percentage of GDP. The UK Government recognise that these benefits stem from an effective regulatory framework, which is why better regulation is an important focus of current Government policy.
The UK's competition regime also forms an important part of its regulatory framework, and here again independent assessment by expert peer reviewers KPMG placed the UK's regime third in the world in 2004. Also, the Global Competition Review has praised the UK's Competition Commission as one of the best competition enforcement agencies in the world, coming joint first (with the US Federal Trade Commission and Department of Justice). Encouraging a high level of competition acts as a catalyst for firms to invest and innovate in order to stay ahead of their competitors.