Skills shortages could leave the UK struggling on the global stage, according to a government report.

The interim report by Lord Leitch called the skills challenge faced by the UK "daunting" in its scale and warned that delivering current government plans would be difficult.

Lord Leitch, chairman of the National Employment Panel, said: "Our nation’s skills are not world class. We run the risk that this will undermine the UK’s long-term prosperity."

He added that improving skills levels would be "of fundamental importance to the UK's economic and social health".

While the UK was seen as having important strengths such as an excellent higher education system, good reforms on vocational training and an increasingly effective school system, there were also considerable weaknesses, the interim report Skills in the UK: The long-term challenge said.

These weaknesses included: a third of adults do not hold the equivalent of a basic school-leaving qualification, almost half are not functionally numerate and a sixth are not functionally literate.

By 2020, Lord Leitch said that existing targets meant there would be significant improvements, however UK skills levels would "continue to compare poorly in an increasingly globalised world".

Chancellor Gordon Brown responded to the interim paper, in his Pre Budget Report speech, by saying that would be an extension of the National Employer Training Programme – which offers free training for employees, help for all small firms with their costs – from next summer. He also pointed to initiatives such as a "training wage" to help teenagers who have "slipped through the net" in eight areas of the UK gain skills and an extension to the New Deal for lone parents, to help them back to work.

The final Leitch proposals for reform will come next year.