Higher education contributes £73bn to UK plc

UUK report details scope of sector’s economic activity, which adds up to 2.8 per cent of GDP

April 3, 2014

UK higher education generates £73 billion for the economy and contributes 2.8 per cent of the nation’s total gross domestic product, according to a Universities UK report.

The sector is “comparable in size to the legal services sector” and “considerably larger than computer manufacturing, the basic pharmaceuticals sector and the air transport industry”, according to The Impact of Universities on the UK Economy, published on 3 April.

UUK says that at £73 billion, the sector’s output – covering direct and secondary impacts – is up 24 per cent from the £59 billion figure that it calculated in a 2009 study, although the figures are not adjusted for inflation.

The report estimates that the sector generated £10.7 billion of export earnings for the UK when on- and off-campus spending by non-UK students is taken into account.

Sir Christopher Snowden, UUK president, said: “With the 2015 general election on the horizon, this report serves as a timely reminder to policymakers of universities’ growing impact on local communities, jobs and the wider economy.”

In his foreword to the report, he writes that there is “a continued need for sustained government investment in higher education for teaching, research and capital. There is also a need for the government to ensure that non-EU students see the UK as a welcoming and attractive destination for study.”

As well as direct expenditure by higher education institutions – the biggest item of which is their staff – the report takes into account secondary effects, notably the spending of staff and international students.

“Through both direct and secondary or multiplier effects, the higher education sector generated over £73.11 billion of output and 757,268 full-time equivalent jobs throughout the economy. The total employment generated was equivalent to around 2.7 per cent of all UK employment in 2011,” it says.

On the sector’s contribution to GDP, UUK gives a figure of £39.9 billion, equivalent to 2.8 per cent of the UK’s 2011 GDP (up from 2.3 per cent of GDP in the 2009 study).

This reinforces the point, the report argues, that “higher education’s contribution to GDP is countercyclical. That is to say universities will tend to grow less than the economy as a whole in boom times but also decline less in recession. In this way the higher education sector makes an important contribution to macroeconomic stability.”


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