In less than three years time, more than half of UK Gross Domestic Product (GDP) will be generated by people who can create software, tools and services, according a report launched today.

But it warned that if the UK wants to keep up this momentum and compete alongside countries such as China, it needs more IT professionals because the country faces a growing skills gap in this area.

It said the country also needs to put in place appropriate Intellectual Property Rights (IPR) that encourage innovation and are fair to consumers.

The 2007 Developing the Future (DtF) report is designed to stimulate debate and is the second in a series that researches the UK software development sector in the UK; the first report was published in 2006.

Commissioned by Microsoft and co-sponsored by Intellect, the British Computer Society (BCS) and The City University, London, the 2007 report highlights the key challenges facing the UK as it evolves into a fully-fledged knowledge-based economy.

The report also sets out a clear agenda for action to ensure the UK maintains its global competitiveness in the face of serious challenges.

Gordon Frazer, managing director, Microsoft UK and vice president, Microsoft International, said: "The DtF 2007 report paints a picture for the UK that is both exciting and inspiring but also profoundly challenging. In our very near future, the shape of the economy and society will have changed dramatically and I believe the UK has the potential to adapt to take advantage of these changes. "

A number of key recommendations are proposed, including reforming the National Curriculum to allow students to study computing at GCSE level and a r eview of teaching computing and ICT in schools.

It said more emphasis should be put on finding ways to inspire young people to look at the creation of software and technology as well as studying the use of software and technology.

The report also said the IT industry should look to increase female recruitment dramatically in order to help fill the UK IT skills shortfall. It also called on Government to develop appropriate IPR for digital technology creation.

Andrew Tuson, senior lecturer and director of student recruitment at The City University, London, said: “The rewards for getting things right in the face of the challenges the DtF report 2007 raises, are huge: greater prosperity for all, a dynamic, inclusive IT profession that offers real challenge and job satisfaction, interesting and simulating school and university curricula, and a university sector that can provide world-class research and education in computing.”