While political attention continues to be focused overwhelmingly on the fiscal crisis, there is a great risk that we overlook two equally significant challenges facing the UK's economy, risks which potentially matter as much, if not more, in the long run. The first of these is well known: the rise of the BRIC economies and, particularly, the Asian behemoths of China and India. The second is less widely acknowledged as a challenge: the spread of the interactive web and its impact on business practices.

This discussion paper - which forms part of IPPR's New Era Economics flagship programme of work - draws on the historical evolutionary strand of economic analysis and a suite of comparative economic data to explain the nature and the scale of these challenges. Our aim is to understand how this period of global and technological transformation will affect the UK, how our economy will need to adapt, and how this should shape policymaking over the coming years and decades.

A closer look at comparative economic data suggests that the key weaknesses which characterised the UK economy throughout the 20th century still exist today: lower business investment, a weaker skills base, less innovative and productive firms, and a smaller presence in the most vibrant emerging markets. The UK economy needs to be at the top of its game, and it is our view that the UK's ability to address these challenges will determine its success or failure in the Asian century before us.