Britain and Sweden have the highest proportion of businesses connected to the Internet. In the last year, the number of businesses trading online in the UK has increased by 20 percent, growing from 450,000 to 540,000. But this figure must increase by half a million within the next year to meet the government target of having one million businesses trading online by 2002. The significance of the finding is also called into a question by a recent report from the Office of National Statistics, which revealed that only 600 UK businesses were conducting more than 50 percent of their trading online in 2000. The UK Online for business International Benchmarking Study 2001, commissioned by the Department of Trade and Industry, was published on Thursday towards the close of E-Business week. E-commerce minister Douglas Alexander said: "the study confirms we are making progress towards our primary aim of making the UK the best place in the world to do e-business. We have set demanding targets and we must continue the e-revolution and help UK businesses to get to the future first." The report measures the UK's performance in e-commerce against ten other countries -- including the US, Canada and Germany. According to the study, the proportion of businesses with access to the Internet is above 90 percent in nearly all countries studied, with the figure reaching 94 percent for the UK. Eighty percent of British companies also have Web sites -- a 14 percent increase from last year. The UK government has already exceeded its target to have 1.5 million small and medium-sized businesses online by 2002. Last year, 1.7 million SMEs were online -- that is having a Web site, using email frequently and using electronic data interchange -- and this figure has now risen to 1.9 million. Among the countries studied, the UK ranks second in terms of the proportion of connected businesses admitting that the Internet has transformed sales and marketing, logistics and delivery, operations, processing and assembly. Britain ranks third for the use the Internet to improve purchasing and after sales service, and fifth for finance. "UK business is feeling the benefits of using technology to improve its communications, efficiency and productivity," said Alexander. "The UK continues to be among the world leaders in making more sophisticated use of technology to transform their business process." See the E-commerce News Section for the latest headlines. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forum. Let the editors know what you think in the Mailroom. And read other letters.