Manufacturing executives are the most negative about the UK as a place to do business, accountants Deloitte have warned.
Only 24 per cent of manufacturers surveyed believed the UK was a good location for their operations.
According to Trading Places, the UK is ranked sixth among 25 world economies as the most competitive place to do business, but this position is projected to slide to 12th if Government and business don't take action now.
Jane Lodge, head of manufacturing at Deloitte, based in Birmingham, said: " The report suggests the environment for the manufacturing sector remains difficult and manufacturers need to be focusing on efficiencies to ensure that they can continue to compete on a world stage."
According to the snapshot of 300 UK business leaders, a further 20 per cent of production is likely to relocate offshore - possibly in emerging economies including China - over the next five years.
Ms Lodge said: "Clearly, UK manufacturers will need to consider the opportunities that emerging markets bring, as well as focus on what the UK does well.
"The Government has taken steps to improve access to skills and innovation for manufacturing businesses and as a result these are the two areas where respondents perceive improvement. However, UK regulation and the tax regime continue to concern the industry and are likely to be a disincentive for manufacturers to locate production facilities here.
"The UK is at a critical point in its evolution as a centre for global business and its challenge is to turn accelerating globalisation into competitive advantage. In the UK between one fifth and one third of all functions are located abroad but this position will need to be kept under constant review in order to tap the global market.
"For their part, Government must concentrate on further policy reforms to ensure they remain in line with the world's best practices. A greater focus on R&D expenditure and smarter, rather than more, regulation should be a priority."
The US is at the top of the league table. Sweden, Finland and Denmark followed closely behind, while Germany was placed fifth.
In emerging countries, South Korea is the front runner ranked at 13, followed by India at 22 and China at 24.