Sovereign wealth funds’ collective value increased 24% to $3.5 trillion (£1.75 trillion) in 2007, the Guardian reports citing a new report from consultancy Global Insight. The research firm said sovereign wealth funds have grown 24% for each of the last three years and predicts that if they continue to grow at the same rate, they could exceed the economic output of the United States by 2015, and the European Union by 2016. The combined value of $3.5 trillion already surpasses the annual economic output of the U.K., Germany or France.

The fastest growing fund over the last five years was that of Nigeria, largely because its oil output increased by 291%. Still, China's fund remains the largest, with $1.2 trillion, followed by Russia and Kuwait.

Jan Randolph, head of sovereign risk at Global Insight, said: “Armed with such large amounts of debt-free cash, sovereign wealth funds are the new financial power brokers, replacing the combined financial muscle of hedge funds and private equity, and usurping central banks as the international capital providers of last resort.”

In January 2008, global acquisitions by sovereign wealth funds touched $20.6 billion. The funds have gained power thanks to high energy and commodity prices and decline in value of the U.S. dollar. “There has been a shift of financial weight from west to east, particularly to China, Asia, the Middle East and other energy countries,” Randolph said, adding that as inflation increased, so did the demand for foreign investment.

The data comes from the firm’s annual Sovereign Wealth Fund Tracker.