You can tell how badly Brexit is going by the amount of gaslighting it needs to create the impression of success. The trade secretary is again trumpeting Britain’s exports, using the kind of obfuscation and suspect figures we’ve come to expect from Ms Badenoch. Brexit has resulted in goods export volumes suffering a significant fall, making the UK even more reliant on services to earn our keep in the world, but she told Express readers: “Let’s ditch the doom and gloom - British businesses are thriving and that’s something to celebrate.”
Ms Badenoch added: “Today's figures show that the Government’s work signing new trade deals, knocking down trade barriers and promoting British businesses across the globe is working, with our services industries in particular reaching record export levels never seen before.”
Trade deals do little for services in any event but the sorry truth is that UK service export growth is actually slightly below the OECD average. In contrast, goods exports have taken a massive 15% hit because of Brexit-related trade barriers. Indeed it would be surprising if the result was anything different. This graph from The Resolution Foundation speaks volumes:
UK goods trade is getting absolutely mullered. It's mad there's not more focus on what on earth is going on pic.twitter.com/ZInQsSaPrr
— Torsten Bell (@TorstenBell) May 15, 2024
In fact, one of our most important service industries is not even seeing average growth, let alone record export levels. Instead, their revenues are about to take a significant downturn. I am, of course, talking about Britain’s universities, a sector that has always enjoyed an excellent reputation and which brings in valuable foreign earnings. This isn’t just a matter of falling exports, a slump in overseas student numbers threatens the entire sector.
The FT reported earlier this week that figures from Enroly, a web platform used by one in three international students for managing university enrolment, showed deposits to a representative sample of 24 British universities had declined by a staggering 57% year on year as of May.
Now the Office for Students, the independent regulator of higher education in England has confirmed the decline in international students in a troubling report on the financial stability of providers. It should ring alarm bells that the OFS thought it necessary to produce the report in the first place.
The OFS says: "Reports suggest that recruitment of international students in the 2023-24 mid-year recruitment cycle could be in the region of 40 per cent or more below the same point in the previous year, and it is feasible that this scale of reduction could carry over into 2024-25."
Even a 40% drop looks optimistic if the Enroly numbers are to be believed.
Universities and colleges have based their future revenue streams on international student numbers rising by 35% between 2022-23 and 2026-27. UK students enrolling for courses were forecast to rise by 24%.
These figures are turning out to be a fantasy, thanks in part to the government's own immigration policies. Last year, to try and reduce legal immigration, they announced overseas students would no longer be allowed to bring dependents with them, and this has created a big problem for the university sector.
The report says:
"Given the increasing volatility in student recruitment described in paragraph 12, we have modelled a simple scenario where there are very modest increases in entrants from the UK and a 45 per cent reduction in international entrants across the sector in 2024-25 compared with 2023-24, with no further growth for the rest of the forecast period. We estimate this could represent a net reduction in income of over £4.3 billion in 2024-25 and over £8.4 billion by 2026-27, compared with providers’ forecasts. This scale of impact would represent a significant challenge for the sector to overcome and based on the latest information about international recruitment, appears to be realistic."
I assume the 45% reduction in international entrants is the worst the OFS thought they could get away with suggesting, but it could easily be an even bigger drop.
As a salesman, I know how dangerous it is to overestimate your strengths or underestimate how attractive your competitor's offer might be to a prospective customer. Brexiteers did this with Brexit, The City of London, and are now doing the same for the university sector. It's OK for Badenoch to shout how well services exports are doing, but delve into the figures and it begins to look like more hubris.
Some may see a fall in student visas as a good thing, a benefit of Brexit even. Unfortunately, universities, to make higher education both accessible and affordable for UK students, have loaded fees onto wealthy international students who pay the lion's share of the costs of running England's universities. Hence the massive £8 billion shortfall in revenues the OFS now expects in 2026-27.
England's students are not going to be subsidised for much longer. But raising the costs for them will only drive UK entrants down further and risk entering a spiral of decline, damaging the quality of the whole sector and cutting international students again.
Another unforeseen consequence of Brexit, eh?
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