The UK economy risks losing £44 billion a year unless Alistair Darling uses his Budget to support the development of new technologies, the National Endowment for Science, Technology and the Arts (Nesta) has warned.
The body has called on the Chancellor to set up a £1 billion fund to finance high-tech companies, filling the gap left by venture capital firms as a result of the financial crisis.
Nesta also urges Mr Darling to use the Government's multi-billion fiscal stimulus package to support lending to companies working on new technologies.
It's report identifies healthcare, green technology and digital media as sectors where the UK could lose its leading international status unless Government support is offered.
It said: "The effects of not investing in these sectors are serious.
"If the innovative capacity of our healthcare sector weakens, over £8 billion worth of pharmaceutical exports and over £1 billion of domestic sales could be lost annually; the cost to the NHS and to society in terms of poorer health outcomes would be considerably larger.
"Failing to capture a share of the global market for clean technologies and environmental services similar to that which we enjoy in other important export markets, and falling behind with plans for renewable energy production, could lead to a loss of over £28 billion in revenues.
"Failing to step up to the digital challenge in our creative economy could cost the UK economy over £6 billion in value added per year by 2013."
Nesta said the UK must move on from the "London model" of growth fuelled by the City and property, instead developing local clusters of innovative businesses.
The £1 billion fund, which would be made up of £500 million of taxpayers' money matched by £500 million of private capital, is being "carefully considered" by ministers, Nesta claimed.
Nesta's CEO Jonathan Kestenbaum said "Previous industrial interventions in the 1960s and 1970s ignored demand and focused on unsuccessful attempts to pick winning firms rather than new growth areas.
"The Government must invest in areas where future demand will drive next generation technologies".
Stressing the importance of new investment, he added: "One dangerous aspect of the current crisis is the collapse of equity finance for early-stage growth business.
"These firms will be the heartbeat of our recovery."