The UK continues to dominate the European software market, according to figures from PricewaterhouseCoopers, which estimates that British firms now account for €13.3bn in software revenues.

Business software vendor Sage led the pack with £880m worth of total revenues. Misys ranked second with £307m, followed by Logica, Symbian and Autonomy Group.

The report found that UK software developers accounted for more than three times that of the closest European nations which had software firms ranked among the top 100.

Germany recorded revenues of €4.3bn from its top vendors, while France pulled in just €1.2bn.

Europe lags behind the US, whose €55bn software industry is nearly equivalent to Europe's entire software market. It is estimated that the entire IT industry in the US is worth $2tn.

Analysts warned that the US dominance of the market could extend even further in a worsening economy. As finances start to slip, European vendors could become the targets of US bargain hunters, according to Jass Sarai, head of software and IT services at PwC.

"Many players have already taken advantage of the opportunities for consolidation, and this relative saturation could curb the ambitions of some of the American vendors," he said.

"However, the smaller software companies are likely to still find themselves the target of a merger approach, enabling them to gain ground in Europe and the potential to emerge as bigger players in the marketplace."