The UK is set to fall behind in the international race for skills and economic competitiveness, despite hundreds of millions of pounds invested in recent years.
The annual report of the UK Commission for Employment and Skills (UKCES) on progression towards the Government ambition of "world-class skills" found that although the UK was making progress, competitors were moving faster.
On current trends, based on data from 2007, the UK is heading for rankings of 20th out of 30 for low-level skills, 21st for intermediate skills and 11th for high-level skills by 2020 - below world-class (defined as the top quartile) in every category and lower than the position today.
Chris Humphries, UKCES chief executive, said: "At the moment, our economy is still world-class - quite an achievement for such a small island. But we're living on past glories.
"Economic success rests on three legs - skills, jobs and productivity - and we are well below average on the first of these. Unless swift and decisive action is taken, we can expect the UK's economy to begin to slide down the international rankings.
"The commission hopes and believes that the UK can continue to be a world- class nation, with some of the best skilled workers and the best businesses."
The UK is on course to exceed its domestic target for 40 per cent of the workforce to have qualifications at level 4 or above. But the numbers with A-level equivalents, or level 3, are predicted to fall short by nine percentage points from a target of 28 per cent, prompting fears of a gap in intermediate skills.