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Report gives evidence of great impact of UK higher education sector on UK economy

The British higher education sector is a substantial industry with a significant and growing impact on the UK economy. This is what emerges from a report published by Universities UK about the economic impact of UK higher education institutions. The study follows on from and updates earlier analyses of higher education, The impact of universities and colleges on the UK economy, McNicoll, McCluskey & Kelly, CVCP 1997,  and The impact of higher education institutions on the UK economy, Kelly, Marsh & McNicoll, Universities UK 2002. The 2006 report provides new evidence of their impact on the UK economy as independent business entities (in addition to their role as providers of human capital), and presents an up-to-date analysis of key economic aspects of UK higher education institutions in the academic and financial year 2003/04, which can be summarised as follows:

  • In 2003/04 the total revenue of UK higher education institutions amounted to 16.87 billion pounds. In terms of sectoral gross output this was greater than the UK pharmaceutical industry;
  • higher education institutions’ total revenue from the public sector corresponded to 61 per cent of all income, whilst income from private sector sources accounted for 27 per cent of all income;
  • higher education institutions’ international revenues amounted to nearly 2 billion pounds, that is 12 per cent of all higher education institutions’ income;
  • through both direct and multiplier effects this sector generated 45.1 billion pounds of UK industry output. The equivalent figure five years ago was approximately 35 billion, which confirms the growth of its economic impact.

The report also provides evidence of the importance of international students to both the UK higher education sector and the wider economy. One significant impact is the international students’ personal, off-campus expenditure, which in 2003/04 was estimated to be 1.5 billion pounds, that is 9 per cent of all UK receipts from overseas visitors to the UK for the year 2004.

The economic impact of UK higher education institutions