Brexonomics: what does the leave vote mean for UK universities?
“There’s no absolute guarantee that EU students starting three or four year programmes in September will have visas to study once Britain is outside the union. That’s a very high level of risk for any EU student”
Ant Bagshaw, assistant director at Wonkhe, the UK’s leading higher education policy analysis website, digs down into the economic impact of Brexit for the UK higher education sector.
Let’s start with the good news. With the value of the pound falling to lows not seen since 1985, the cost of exports – including tuition for foreign students – have reduced dramatically. International students with places to study in the UK have just seen their fees and costs of living reduce by ten per cent. That should be good for demand even if the global PR disaster that is Brexit (we’ve decided to become a more insular nation) diverts some students to other Anglophone markets.
In the slightly longer term, there might be further good news as, despite the credit rating downgrade, the costs of government borrowing have reduced. That puts the national finances in better shape (for now, at least) and is a stabilising force for the main method of getting money to UK universities, via the government’s student loan scheme for UK and EU students. The Student Loans Company has guaranteed continuation of loans for EU students starting courses this autumn so that, if the UK leaves the EU formally while they’re studying, they can still access finance.
“Despite the credit rating downgrade, the costs of government borrowing have reduced. That puts the national finances in better shape (for now, at least) “
However, the uncertainty is still very worrying indeed. There’s no absolute guarantee that those EU students starting three or four year programmes in September will have visas to study once Britain is outside the union. They almost certainly will, but at this stage it can’t be absolutely guaranteed. That’s a very high level of personal risk for any individual EU student which surely will hit recruitment. The UK has some 125,000 EU students (over 5% of the student population), with some higher education providers, particularly in Scotland and specialist art and music institutions, having 20-30% of their student body from the continent.
Universities could find it harder to borrow to fund capital investment: some have already received the news of their credit rating downgrades. And UK universities have benefited from €2.6 billion of loans from the European Investment Bank since 2011, a source of capital which is very likely to dry up. It’s possible, as the political mood seems to be edging from austerity politics to recognising the need for stimulus, that universities could benefit from any government capital investment, though they’ll be competing with schools, hospitals and transport infrastructure projects. And this could be some way off, if it happens at all.
“UK universities have benefited from €2.6 billion of loans from the European Investment Bank since 2011, a source of capital which is very likely to dry up”
It’s the prevailing political winds which will have the biggest impact on universities. If there is renewed zeal for reducing immigration, then the UK’s attractiveness as a destination for international students may be further eroded through complex and expensive visas or restrictions on absolute numbers. If the UK doesn’t accept free movement from the EU then it’s almost certain that its universities will lose access to European research funding, something the UK has been very successful in winning in the past, and which is currently worth 14% of research income.
The worst thing is the limbo state while we await a new prime minister, and then the question of his or her timetable for Article 50 negotiations and eventual exit from the EU. There is a lot to negotiate: universities will want free movement for staff and students, continued access to European research funding, and easing controls on international student visas. But these are considerations at odds with the Leave vote. It also depends how long and deep the anticipated economic slowdown lasts as to what the true cost of Brexit means for universities (as well as the wider economy). Let’s all watch this space.