SCOTTISH universities have highlighted a report that warns European higher education is at risk of falling behind international competitors.

Universities Scotland, which represents university principals, said the pace of investment in higher education in emerging countries such as India and China was a significant new challenge for the sector.

The organisation also pointed to evidence from the European Commission that Europe is at risk of falling behind in the skills required for the economy to recover and thrive.

The commission predicts 35% of all jobs will require high-level qualifications by 2020, but currently just 25% of the workforce have such skills.

Its report goes on to point out Europe already has a shortage of researchers, notably in disciplines such as science, engineering and mathematics.

"The EU has six researchers for every 100 people in the labour force, compared to nine in the United Sates and 11 in Japan," the report states.

Last month, Scottish universities received a generous settlement from the Scottish Government which they believe will enable them to maintain their competitive edge in the short term.

However, Alastair Sim, director of Universities Scotland, said governments across Europe should be aware of the fast-changing international picture.

"The report recognises the challenge that, if we stand still, we will slip back in relation to the competition," he said. "In 2000, the UK was in the top quartile of countries in the developed world for production of graduates, but we have now slipped back into the middle of that pack.

"It is an extremely competitive and fast-moving world and, if we look at the EU economy, including our own, we will need a higher percentage of the population educated to graduate level in future."

Mr Sim dismissed suggestions countries such as Scotland had too many graduates.

He said: "If you look at the trajectory of participation in higher education, universities have tapped into a huge wealth of human potential and not only given people the opportunity to realise their full potential, but also the capacity for them to contribute to the economy. The idea that only a limited population can benefit from a university education is just false and our competitor countries are storming ahead.

"Scotland is in a good place at the moment, producing a good number of well-qualified graduates, but we are not in a leading place. Getting a favourable spending review does keep us in that internationally competitive game, but we cannot stand still."

The report by the European Commission said: "Despite a challenging employment climate in the wake of the economic crisis, higher education represents a sound choice, yet the potential of European higher education institutions to fulfil their role in society and contribute to Europe's prosperity remains under-exploited.

"Europe is no longer setting the pace in the global race for knowledge and talent, while emerging economies are rapidly increasing their investment in higher education. The knowledge economy needs people with the right mix of skills ... but public and private employers, including in research-intensive sectors, increasingly report difficulties in finding the right people for their evolving needs.

"Too few European higher education institutions are recognised as world class."

The report said only 200 of Europe's 4000 higher education institutions are included in the top 500 in the world.