International students worth £25 billion to UK economy

International students studying in the United Kingdom now generate more than £25 billion (US$30 billion) for the economy and provide a significant boost to regional jobs and local businesses, according to new figures.

New research into the economic impact of international students – conducted for Universities UK by Oxford Economics – shows that in 2014-15, spending by international students supported 206,600 jobs in university towns and cities across the UK.

In total, the analysis found that, in 2014-15, on- and off-campus spending by international students and their visitors generated a knock-on impact of £25.8 billion (US$31 billion) in gross output in the UK. The spending of international students is additional to that of UK residents so provides an export boost to the UK. In 2014-15 they were responsible for £10.8 billion (US$13 billion) of UK export earnings.

International students paid an estimated £4.8 billion (US$5.8 billion) in tuition fees to UK universities. This accounts for more than 14% of total university income. Some 88% – £4.2 billion (US$5.1 billion) – of this fee income was paid by students from outside the European Union.

Dame Julia Goodfellow, president of Universities UK, said: “These figures highlight the enormous economic contribution international students now make to UK plc and to jobs and communities in every region of the UK.

“The spending of international students and their visitors now provides a major export boost for the UK economy. This is not something limited to London or to one or two big cities, but to towns and cities across the UK.”

As well as tuition fee payments, international students spend money off-campus on a wide range of goods, services and activities. This amounted to £5.4 billion in 2014-­15. The transport and retail sectors are significant beneficiaries of international students’ spending. Their off-campus spending added £1.2 billion to the UK transport industry and £750 million to the retail industry.

International students also attract a significant number of overseas visitors during their time studying in the UK. The spending by these friends and relatives, at hotels, restaurants and attractions, also makes a significant contribution to the economy, according to the analysis.

Friends and relatives will often visit international students studying at UK universities, such as parents travelling to drop off or collect their children, or visit while on holiday. As the expenditure they undertake in the UK is additional to that spent by UK residents, it creates extra economic activity in the country.

Visitors to international students in the UK spent an estimated £520 million – benefitting in particular the transport, hotels, hospitality, cultural, recreational and sports attraction sectors – generating an estimated knock-on impact of £1 billion in gross output.

The UK is currently the second most popular destination for international students after the United States and attracts a substantial number of overseas students each year. In 2014-15 the 437,000 international students studying in the UK – with 125,000 from the EU and 312,000 from the rest of the world – made up 19% of all students registered at UK universities.

Dame Julia Goodfellow said: “While this report focuses on economic impact, it is important to remember that international students also enrich our campuses and the experience of UK students, both academically and culturally. Many return home having built strong professional and personal links here that provide long-term, ‘soft power’ benefits for the UK.

“Our world-class higher education sector is one of the UK’s outstanding success stories. We have the second largest share of the global market, behind only the USA. This is a potential growth area and there is scope for the UK to welcome more qualified international students and build on this success.

“To do this, we must present a welcoming climate for genuine international students and ensure that visa and immigration rules are proportionate and communicated appropriately. This will be even more important as the UK looks to enhance its place in the world post-Brexit.”

This report is the latest in a series of studies commissioned by Universities UK looking at the impact of universities on the UK economy. This new data is part of a larger study analysing the economic impact of UK universities and of international students, to be published later in 2017.

This UK-wide impact is mirrored at a regional and local level. For example, in the North West of England, international students’ off-campus expenditure was £458 million in 2014-15, generating a £281 million contribution to local gross domestic product and 3,995 full-time jobs. The analysis includes figures for all nine regions in England.

London attracted 101,465 students from outside the UK in 2014-15, just over double the next most popular destination region, the South East (49,995 international students).