Developing nations 'to overtake G7 by 2050'

The G7 group of rich nations will be overtaken by an "E7" bloc of emerging economies by 2050, presenting a major challenge to a swathe of Western companies and workers, according to research published today.

The collective size of the economies of the fast-growing septet - China, India, Brazil, Russia, Indonesia, Mexico and Turkey - will have surpassed the Group of Seven by as much as 75 per cent by the midway mark in the century, it said.

The report, by the accountancy firm PwC, said the rise of these economies was beneficial to the West but warned there would be winners and losers - among companies and individual workers.

Its report, which it said showed an urgent need for boosting skills levels, came as the online retailer Amazon.com said it was moving its main European customer service centre from Slough to the Irish Republic because of a shortage of multilingual workers.

PwC found that people with low or medium-level skills would come under threat - both from having their jobs moved overseas and having them taken by migrant labour.

Eventually, even high-skilled professionals such as lawyers and accountants could find their livelihoods under threat from increasingly well-qualified citizens of the E7.

"It does seem likely that many individuals will face increased competition either from workers in the E7 and other low-cost countries due to outsourcing and offshoring, or from migrant labour moving to [rich] countries," it said.

It highlighted low and medium-skilled workers in tradable sectors and their counterparts in sectors open to migrant labour.

This second group included everything from aromatherapists to plumbers.

"Many of these service-sector roles will be relatively low-wage jobs where competition from migrant labour may be fierce," it said.

"Premium incomes currently earned by highly skilled and educated professionals - senior lawyers, accountants, bankers, financial market analysts - will tend to be gradually eroded by an increasing number of equally well-qualified, extremely highly motivated and hard-working English-speaking professionals from the E7 countries."

But it said that many business sectors and trades would be better off as long as Western countries adapted to take advantage of a surge in wealth in these fast-growing countries.

John Hawksworth, the head of macroeconomics at PwC, said the growth of these countries was a "net positive" for the West because of the potential gains to businesses, skilled workers and consumers.

"The UK economy as a whole should benefit from the growth of these emerging economies by allowing us to specialise further in areas where we have a comparative advantage," he said.

Retailers, business service firms, media companies, health and education providers, utilities and financial services companies would have the potential to take advantage of the situation.

- INDEPENDENT