Corporate Britain's concern that it is losing its competitive edge has prompted the head of the UK's Confederation of British Industry to draw attention to the rapidly expanding economies of India and China.

On the eve of the annual Confederation of British Industry conference, which began in Birmingham on Sunday, Digby Jones -- director general of CBI -- warned how India and China could easily outperform Britain and the rest of Europe if they fail to stay competitive.

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Jones' warning comes hard on the heels of economic predictions by Standard Chartered Bank chief economist Dr Gerard Lyons who told rediff.com last week that the rapid expansion of the Indian and Chinese economies invoked memories of the early 19th century when the two countries accounted for 45 per cent of global gross domestic product.

"Both countries were prosperous and peaceful and benefited from effective government, good communications and increased trade - features from which they are benefiting once more."

A spokesman for the Confederation of British Industry told rediff.com that the similarity and timing of the two sets of economic projections was co-incidental, but added that Jones' analysis was prompted more by concern over what was happening back home in the United Kingdom.

"What he (Jones) is talking about is that while the UK is a good place to do business in so far as the tax regime and labour market flexibility is concerned, the gap with our competitors is being eroded."

In his pre-conference comments to the media, Jones said, "We are very worried about what is coming down the track in the erosion of competitiveness."

"We are very worried that labour market flexibility will be further eroded in the next couple of years. Coupled to that is the growing militancy of some trade unions," he added.

"India and China will eat Europe for lunch, dinner and breakfast if we are not careful."

The Confederation of British Industry spokesman told rediff.com that the movement of call centres to India was an example of how Western professionals could no longer compete with their less well paid and often better qualified Indian counterparts.

He said European Union restrictions on hiring temporary workers and plans to restrict the working week to 48 hours would also affect competition.

"The point of Digby Jones' comments is not about China and India, but the UK and how our competition is faring", the spokesman explained.