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\t\tUniversity funding crisis. Even with tuition fees rising slightly to \u00a39,535 in the coming academic year, the increase will still fail to cover the cost of most courses. (Photo by Christopher Furlong\/Getty Images)\t<\/p>\n\t\t\tTuesday 16 September 2025 8:42 am
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\t\t\tTuesday 16 September 2025 4:27 pm\n\t<\/p>\n
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\t\tUniversity funding crisis. Even with tuition fees rising slightly to \u00a39,535 in the coming academic year, the increase will still fail to cover the cost of most courses. (Photo by Christopher Furlong\/Getty Images)\t<\/p>\n
UK universities<\/a> are facing mounting funding crisis that is affecting the country\u2019s wider economy<\/a> \u2013 with regions like Wales and the North East more at risk.<\/p>\n According to new analysis from Oxford Economics, universities added \u00a380bn in gross value added (GVA) to the economy and supported 1.2m jobs in 2024, including staff directly employed by universities, supply chain spending, wage spending, and international students\u2019 subsistence spending.<\/p>\n However, this contribution is under strain from frozen domestic tuition fees, a \u00a35.3bn research funding deficit, and increasing restrictions on international students.<\/p>\n Universities plug the gap <\/p>\n Universities have long plugged the gap left by capped domestic student fees \u2013 which have fallen by more than a third since 2012 due to inflation \u2013 by expanding their offering for international students, who pay up to \u00a338,000 a year compared to \u00a39,250 for domestic undergraduates. That model is now faltering. International enrolments fell 17 per cent in 2024 amid stricter visa rules and political pressure to reduce migration.\u00a0<\/p>\n In May, the government published the \u201cRestoring Control over the Immigration system\u201d white paper, proposing a six per cent surcharge on overseas tuition fees<\/a>, a move the Higher Education Policy Institute warns could cost English universities more than \u00a3600m annually if it goes ahead.<\/p>\n Economist David Schmutz, who led the Oxford Economics study, said that while London and the South East receive the largest economic benefits from universities, their productive and diversified economies make them less reliant on the sector. <\/p>\n By contrast, in the North East and Wales, universities account for six per cent and 4.9 per cent of regional GVA respectively, well above the UK average of 3.5 per cent. These areas rely far more on international student spending and university wage flows \u2013 leaving them disproportionately vulnerable to any decline in the sector, Schmutz explained.\u00a0<\/p>\n The sector is forecasting a third consecutive year of decline in financial performance, with more than four in ten institutions expecting a deficit this year. <\/p>\n Universities are making operational cutbacks to deal with growing financial pressures, and choices available to students are being reduced. <\/p>\n \t\t\t\t\tRead more<\/p>\n