Budding entrepreneurs can set up a business in Britain in less than two working days and with less than £60, a new European Commission report says.

The minimum capital required to establish a private limited company in either the UK or Ireland is just 60p - compared with more than £14,000 in some EU member states.

The figures are contained in an annual review assessing the efforts of governments to promote small business start-up slashing red tape and bureaucracy and creating a new breed of entrepreneurs.

EU leaders set up a small firms' charter in 2000, pledging to make life easier for businesses struggling to get off the ground.

A small firm is deemed to have up to 50 workers and there are now 20 million such companies in the 15 member states employing 65 million people.

The UK is singled out for its modest start-up costs and efforts to improve business links with schools and universities.

The minister responsible for small businesses, Nigel Griffiths, said: "The UK is the first member state to take direct action to ensure small firms' voices are heard throughout Europe by setting up Smallbusiness Europe.

"I welcome the report as it puts the spotlight back on small firms, recognising their central role in the economic activity of the European Union."

The report says the 20 million small firms now operating in the EU account for 99 per cent of all businesses. It is therefore crucial to maintain the right environment for them.

The report says it is now possible to set up a private limited company in less than two weeks in ten member states and at a cost of less than £300 in six member states.

In the UK, a company with a sole proprietor and one partner can be set up in just two working days while the UK and Ireland have a token 60p minimum capital requirement for setting up a private limited company.