The Conservatives were warned not to cut public funding to universities to pay for tax breaks.
Speaking to The Times Higher ahead of a fringe meeting at the Conservative Party conference, Malcolm McVicar, vice-chancellor of the University of Central Lancashire, said: "You aren't going to get away with reducing public funding to universities without doing fundamental harm to the economy."
The meeting was sponsored by Campaigning for Modern Universities.
Professor McVicar said that endowments, business funding and overseas students were not "magic wands".
"In the US, a few institutions receive very large endowments and are fabulously rich but most of them don't and aren't. Endowments are no magic solution," he said.
"Another myth is that employers are queuing up to put money into higher education. But there is no reason to think that business is going to invest more in the next decade than in the past."
Britain would be "very lucky" to retain its share of the international student market in the next ten years, he said.
"This is a reality check: there is no getting away from the fact that the majority of universities' income is going to have to come from the state and from students."