UK vice-chancellors are planning for smaller increases in student numbers at their universities than they were two years ago as an era of high growth appears to be ending ¨C with a fifth actively looking at mergers.

A recent , conducted by PA Consulting and shared exclusively with ÌÇÐÄVlog, suggests that universities no longer believe they can grow their way out of the financial crisis gripping the sector, with the number of vice-chancellors planning for more than 20 per cent growth in domestic enrolments falling from 17 per cent in 2023 to 5 per cent in 2025.?

And, as the proportion of universities looking to maintain or reduce their domestic student intakes has increased from 25 to 45 per cent, growth plans for international students have also taken a hit.

In 2023, 42 per cent of universities planned to significantly grow international recruitment by more than 20 per cent. This year,?roughly 60 per cent of universities plan to moderately grow international recruitment over the next three to five years, but only eight percent are forecasting ¡°significant¡± growth in international undergraduate recruitment.

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Overall, the report says, ¡°most institutions have become more modest in their recruitment ambitions, with the majority looking to maintain current levels of business over the next three to five years¡±.

Analysts from PA Consulting suggested that this sentiment could?reflect warnings from the Office for Students about ¡°unsustainable over-optimism¡± in past business forecasts.?

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In the past, universities have been able to ¡°grow their way through difficulties,¡± said Mike Boxall, higher education expert at PA Consulting.

¡°There are very, very few universities now thinking they¡¯re going to grow their way through the current difficulties and in fact a lot¡­are looking much more at consolidation and strengthening their core base rather than expanding.¡±

The organisation¡¯s report, which was based on survey responses from 40 vice-chancellors and follow-up interviews with 20, also finds that one in five institutions are actively exploring mergers as the sector looks for efficiencies.

However, Boxall said, this doesn¡¯t necessarily represent a ¡°huge uptick¡±.

¡°There have always been some mergers in the sector and most universities have in their history mergers of different kinds,¡± he said.?

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In interviews, vice-chancellors expressed ¡°mixed attitudes¡± towards mergers, with the majority not anticipating ¡°system-wide restructuring¡±, the report continues.?

Interviewees agreed that most mergers are, in practice, ¡°take-overs of a struggling provider by a stronger partner¡±.

¡°They are inherently expensive, complicated, and time-consuming, representing unwanted distractions to institutions already managing their own challenges,¡± the report says.

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With repeated warnings throughout the sector about?dire financial forecasts, and with the Scottish government?forced to intervene?to bail out the University of Dundee, vice-chancellors were also concerned about the sector-wide impact of any providers going under, with 36 per cent fearing that the failure of several institutions would have ¡°a contagion effect¡±.?

¡°The concern is less about the fact of failures because, despite everything¡­over the years, there have actually been very, very few universities that have failed and had to be bailed out,¡± said Boxall.?

However, financial challenges create uncertainties that could see banks tighten their conditions for lending, or students potentially deterred from applying to university, he continued.?

A vice-chancellor quoted in the report anonymously said, ¡°Even a single major failure could make planning any change in the sector almost impossible as the scale of contagion from an unplanned event is unpredictable.¡±?

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helen.packer@timeshighereducation.com