The UK is shunning piracy and leading Europe in the legitimate use of software, according to the latest research.
Figures from analyst IDC and the Business Software Alliance (BSA) show that a quarter of business software used in the UK is counterfeit.
This compares with over 50 per cent in Spain, and close to 100 per cent in eastern Europe and Russia.
The report also showed that northern European countries are on average less likely to use pirated software.
Deanna Slocum, committee representative at the BSA, said: "Ten years ago Italy was a one disc country: you'd lose the market the minute you sold a product.
"As for eastern Europe you couldn't buy Western commercial software a decade ago, so it's not surprising that the problem's so bad there."
The report claimed that cutting UK piracy rates by a further 10 per cent could bring in another £2.5bn in tax revenues, and add 40,000 jobs to the IT sector over four years.
It also pointed out that the countries with the highest rates of software piracy have the lowest rates of IT tax revenue.
"There is a correlation between government regulation and piracy," said Richard Robinson, IDC's UK vice president.
"Meanwhile companies could use the revenue gained by cutting piracy on research and development, increasing support services and building up the channel. The vast majority of these jobs would be local."
IDC found that software pirates are becoming increasingly sophisticated in their techniques and in the appearance of the final product, and that peer-to-peer networks are adding to the problems facing software vendors.
The report covered countries making up 98 per cent of the IT market, and used figures from the last quarter of 2002.
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