Universities contribute £116 billion to UK economy, says analysis

More than 750,000 jobs are supported by the UK higher education sector, according to a new report.

Commissioned by Universities UK, the paper says that the sector contributed approximately £116 billion to the UK economy in 2021-22 – £46.1 billion of which was the direct economic impact of the sector.

A further £69.5 billion resulted from the indirect and induced effects throughout the wider economy, through the institutions’ supply chains and their employees’ purchases of goods and services.

Published by London Economics, the report shows that the equivalent of 385,000 full-time staff were directly employed by UK higher education providers in 2021-22, and local businesses such as restaurants and retailers were supported by providers’ activities to employ an additional 382,500 full-time equivalent jobs.

This means that the total employment impact associated with higher education providers’ operations across the UK was estimated to be 768,000 in the last academic year – 3 per cent of all employment in the country.

Of these, around 17 per cent were in London, 12 per cent in the south-east and 11 per cent in Scotland.

Universities UK said there was a pressing need to reform how universities were supported in order to sustain their positive economic impact.

Sally Mapstone, principal of the University of St Andrews and president of Universities UK, said: “Universities are the beating heart of so many local communities. As economic hubs in their own right they support and create a huge number of jobs across multiple sectors, meaning people up and down the UK benefit financially, whether or not they have degrees.”

Dame Sally said they also played a crucial role in creating the graduates, spin-outs and start-ups that provided the basis for economic growth.

“The country’s continued investment in higher education institutions can and does pay back dividends for the UK as a whole,” she added.

According to the findings, university activities in 2021-22 helped support 444,200 jobs in the government, health and education sector, 127,800 across distribution, transport, hotels and restaurants, and 74,700 in professional and support activities.

London Economics said the estimates represented only the economic impact associated with the “physical footprint” of the sector, not the additional economic contributions associated with their teaching and learning activities, their research or their educational exports such as international students.

Gavan Conlon, partner at London Economics, said the sector was instrumental in driving economic growth in both the short and longer terms.

“Given the financial challenges institutions face, there is a need to provide both adequate resources to support teaching and learning activities, but also certainty in respect of research funding,” added Dr Conlon.

patrick.jack@timeshighereducation.com