The UK has been urged to keep investing in its universities, as new figures show that it spends just 0.9 per cent of its gross domestic product on higher education.

Figures from the Organisation for Economic Co-operation and Development’s annual Education at a Glance report show that the UK spends less than the 1 per cent average spent across the developed nations on higher education. It compares with 1.4 per cent in Sweden, 1.5 per cent in Canada and 1 per cent in the US.

The OECD said the measure “shows the priority a country gives to education in terms of its overall resource allocation”. Andreas Schleicher, the report author, warned that the UK is being overtaken by other countries.

Angel Gurria, OECD secretary general, said: “As we emerge from the global economic crisis, demand for higher education will be higher than ever. To the extent that institutions are able to respond, investments in human capital will contribute to recovery.”

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From the report, the UK’s University and College Union has calculated that the UK spends 20 per cent less of its GDP on universities than France, 10 per cent less than the US and 10 per cent less than the OECD average.

The UCU has estimated that to catch up with the OECD average, the UK would need to spend an additional £1.4 billion of public funds (at 2006-07 prices) on higher education.

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The report says that 39 per cent of school-leavers in the UK went on to gain a degree in 2007 – placing the UK 14th out of 26 developed nations. This is up from 37 per cent in 2000, but the growth has been slower in the UK than in other countries.

It also shows that the UK has nearly four times as many “Neets” – young people not in employment, education or training – as France and nearly twice as many as the US.

Sally Hunt, UCU general secretary, said: “These figures make very disturbing reading. It should come as little surprise that countries who invest more public money in higher education have fewer young people not in employment, education or training. We simply cannot afford to be left behind when it comes to funding our universities, yet we are investing considerably less of our GDP than competitor countries.

“There is a clear economic case to be made for investing in our graduates. Aside from the obvious benefits of more teachers, nurses, doctors, engineers, etc, graduates are less likely to commit crimes, they are less likely to be a burden on the NHS and less likely to stretch the creaking benefits system. We must abandon any notion, however, that this can be done on the cheap.”

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The study confirms the UK’s status as the second-biggest educator of students from overseas, after the US. But it warns that a “comparatively low rise in foreign enrolments in the United Kingdom and the United States between 2000 and 2007… may be attributed to the comparatively high tuition fees charged to international students”.

David Lammy, the Higher Education Minister, said: “There are currently more students than ever before at UK universities and our support has helped more than 2.8 million people to gain basic skills qualifications since 2001. As this latest OECD report shows, the proportion of adults in the UK holding a degree is above average, with them enjoying a better return on their qualifications than most comparable countries.”

phil.baty@tsleducation.com