Switzerland has replaced the US as the world’s most competitive economy, according to a survey from the World Economic Forum.

The Global Competitiveness Index, which is produced annually by the Geneva-based think tank, said the deterioration of US financial markets and macroeconomic stability had caused it to slip to second place. It was the first time the US has not occupied the top spot since the index was introducted in 2004.

Trust in US banks fell to 108th position — just behind Tanzania — while a soaring budget deficit pushed its ranking for economic stability to 93rd from 66th.

Singapore, Sweden and Denmark rounded out the top five most competitive economies, while Finland, Germany and the Netherlands were in the top ten.

However, the UK fell one place to 13th due to the continuing weakening of its financial markets. A large budget deficit also pushed the Republic of Ireland down three places to 25th on the list of 133 countries.

But leading emerging markets China, India and Brazil all improved their competitiveness, despite the economic crisis.

Xavier Sala-i-Martin, professor of economics at Columbia University and co-author of the report said: “Amid the present crisis, it is critical that policy-makers not lose sight of long-term competitiveness fundamentals amid short-term urgencies. Competitive economies are those that have in place factors driving the productivity enhancements on which their present and future prosperity is built.

“A competitiveness-supporting economic environment can help national economies to weather business cycle downturns and ensure that the mechanisms enabling solid economic performance going into the future are in place.”