MR Bill Gates of Microsoft and" Mr Andy Grove of Intel warned Europe's business elite yesterday they were falling behind their global competitors in harnessing new technology to boost performance.

They delivered the same message in separate appearances at the World Economic Forum gathering of world business and political leaders in Davos, Switzerland. Europe needs to wake up to the advantages of computer networks and hi tech communications, they said.

"If you compete with companies that are heavy users of information technologies ... and you do not embrace that same technology, you will be beaten to the punch every time in terms of time and information use and effectiveness," said Mr Grove, whose company is the world's biggest computer chip maker, with its European headquarters in Leixlip, Co Kildare.

"What we are really doing is we are building a technology deficit and we are passing this technology deficit along to future generations," Mr Grove told a seminar on using information technology, to stay competitive.

He urged European leaders to head off this deficit by setting an example of using tools such as Email, Internet, company wide networks and video conference links.

Mr Gates, whose Microsoft is the world's leading software maker for personal computers (PCs), agreed that Europe lagged both the dominant US and some Asian states in using computers as well as developing software themselves.

"Europe is quite a bit behind in terms of home use, it's somewhat behind in terms of business use," he told a news conference after three days of private talks with some of the almost 2,000 corporate, political and academic leaders at the annual forum.

"There is progress. But if you take US progress in using these tools and European progress, there are signs of an increasing gap.

Mr Gates said he believed Europe's lag behind the US as a software developer would narrow as investors discovered opportunities in small firms now cropping up and as venture capital became more available.

"But the gap is big enough that everybody should think about what can be done to encourage more software start ups in Europe.

Computer industry analysts also say European companies have been slower to embrace personal computers and may be missing out on extra productivity and profit.