Higher education contributes £33 billion to economy

By Kylie MacLellan

LONDON (Reuters) - The higher education sector contributed more than 33 billion pounds to the British economy it was revealed on Wednesday just hours after Business Secretary Peter Mandelson said it needed to do more to contribute to growth in the future.

Mandelson on Tuesday outlined the government's plans for higher education over the next decade, saying it needed to make an even bigger contribution to growth.

But a study of 166 universities and colleges, published on Wednesday, showed they contributed more than 33 billion pounds to the British economy in 2007/2008, and generated jobs for nearly 3 percent of the workforce.

The study, produced by the University of Strathclyde for industry body Universities UK, found that through both direct and secondary effects the higher education sector generated more than 59 billion pounds of output, up from 45 billion five years ago.

"Universities are critical to this country's economic performance," said Business Secretary Peter Mandelson. "This importance will only grow over the next decade."

The scale of economic activity generated by universities is now larger than each of the pharmaceutical and advertising industries in the UK, the report said.

Universities contributed 31 billion pounds to the UK economy, while off-campus spending by their international students and visitors added a further 2.4 billion pounds, making the total contribution equivalent to 2.3 percent of UK GDP in 2008.

While universities directly employed about 372,400 people, total employment dependent on higher education expenditure was more than 668,500 full-time equivalent jobs, it said, around 2.6 percent of full-time equivalent employment in 2007.