Snapshot of the impact of the economic crisis on European universities

National Rectors’ Conferences held in January and February this year have been asked to report on the situation facing their universities in the current economic climate. The results have been mixed.

In several countries, such as Norway and the United Kingdom, universities have not felt any direct impact, although they foresee more difficult times ahead. Anticipating this, the British university sector has implemented a communication campaign promoting the role of universities in helping business in times of economic downturn – similar plans are underway in other countries. Meanwhile, Denmark and France have increased the level of public funding, and Germany and Switzerland have boosted spending on university infrastructure as part of national stimulus packages.

Other governments have reacted differently, with higher education budgets in Hungary, Italy, Lithuania, and Poland facing cuts, and a possible freeze on planned increases in Austria.

Finally, there is a general concern over the degree of commitment from the business sector, and a view that the economic downturn may decrease the funding coming from private sources.

Austria

In Austria, the economic crisis is seen as an argument for the government to discard previous electoral promises to increase investment in higher education, both in terms of how much extra universities are to be given, and when they will start to receive it. There have also been cuts in funds for competitive research funding. Universities hope to be able to convince the government to reinstate some of the promises made before the economic downturn. Reductions in private research funding are anticipated.

Denmark

The Danish government is to release extra funds for research that had been put aside in 2006. Universities’ concerns thus are more focused on whether investment from the private sector will decrease in the near future. The national rectors’ conference therefore insisted on the need to invest in higher education and research at times of economic downturn.

Estonia

The Estonian government is currently discussing budget cuts. The latest available numbers are 3 per cent for teaching grants and 1 per cent for research. R&D contracts with both public authorities and private sector are expected to decrease. Tuition fees are also an issue as there is little leeway to increase the rates in times of economic downturn. Parallel to these trends, new funding schemes and governance reforms are under discussion.

Finland

The Finnish parliament will vote in the first part of 2009 on a new university reform, which includes governance and financial provisions. Universities will be expected to raise more funds from the private sector, especially from business, which could be difficult in the current economic crisis. Government plans include increased investment to lessen the effect of the economic crisis, but the details are still being worked upon, and it is unclear whether universities will benefit from such a package.

France

In France no foreseeable budget cuts in the universities’ public funding have been reported. On the contrary, the government is engineering a sizeable reform of the higher education sector, which includes not only autonomy but also increased public investment of €1 billion per year for the next five years.

Germany

Universities expect increased investment from the German federal government to fund building, maintenance and renovation of facilities. This has been confirmed by the announcement of a second stimulus package from the government, which includes investment in university infrastructure. However, fears that universities will receive less than promised have recently arisen. The sector would need 1/3 of the money earmarked for education, around €2.9 billion. Future cuts to make up for the large amounts that will be spent under the stimulus package are also feared. So far there is no indication on how far the economic crisis will affect private funding.

Greece

Chronic under-financing, rather than the current economic crisis, is what most concerns Greek universities. Despite announcements that the government intends to increase public funding to universities in the future, there is so far no data on how much will actually be passed on to higher education institutions.

Hungary

In Hungary, the situation faced by higher education institutions appears difficult, with decreases of 7 per cent in public funding already announced.

Italy

Italian universities expect to feel the impact of the crisis by the academic year 2010/2011, when the government has announced it will decrease public funding by around 10 per cent.

Lithuania

The Lithuanian government, newly elected, has announced cuts in public funding of up to 10 per cent. The government is also in the process of passing a new law that will lead to more regulation of higher education institutions.

Norway

Universities in Norway are not suffering from any obvious effect of the crisis yet, although awareness that the situation could worsen is rising, and the national rectors’ conference has been trying to argue for public funding increases to prevent this. Investment in higher education, especially targeted at increasing the number of students, in particular at PhD level, is being urged, claiming that this will benefit the economy. Part of the money mobilised in the stimulus package will benefit universities, notably through infrastructure expenditure.

Poland

The Polish Government announced budget cuts for higher education and research in the range of 6-7 per cent. The cuts will affect research more strongly than teaching. It is expected that investments and renovations will be most severely affected. However, many investments are financed through EU programmes and these will be less affected. Financial aid for students is also expected to decrease.

Portugal

The Portuguese government is not considering further cuts in universities’ public funding due to the crisis. However, universities do expect difficulties as far as private funding is concerned, with a fear that businesses might be reluctant to invest.

Spain

The financial situation in some of the Spanish public universities has got worse due to the presidents of some of the different regions of the country announcing big cuts in their university budgets. The usual rate set by the government has been altered and, in some cases, even reduced.

On January 30th, the Spanish government passed an action plan to support moderisation of the Spanish university system. The plan will contribute €37 million to first and second degree scholarships and €85 million to help universities modernise their structures.

Switzerland

Swiss universities do not expect any cuts in public funding as a result of the crisis. The new federal law will not enter into force before 2012, which will have the effect of implementing a new funding formula from 2016 onwards. However, universities might face financial difficulties in their non-publicly funded activities as the salaries of civil servants increase in real terms. There is a fear that the economic crisis serves as a motive for reductions in public and private donations.

The Netherlands

The Dutch rectors’ conference has reported difficulties in negotiating with the government for public funding increases, however, no direct budget cuts are planned so far. The rectors’ conference is especially concerned about sensitive areas in research and innovation where collaboration with the business sector is endangered. They fear that companies may pull back from their financial commitment. As a result, they have called upon the government to step in and invest strategically for a limited period, until business is confident enough to renew its cooperation with universities.

United Kingdom

British universities have been affected by the financial crisis in different ways. The media has focused on instances where some universities had deposits in Icelandic banks, and where some universities’ endowment funds have declined in value due to the economic crisis.

So far, the economic downturn does not seem to be affecting student recruitment, indeed, rather the reverse.

Public funding for teaching will increase by 3.2 per cent and for research by 4.5 per cent in 2009-2010. The allocation of research funding per institution will be published in March.

A €71 million Economic Challenge Investment Fund has been set up to enable universities to respond rapidly to the needs of employers