Expenditure on tertiary education as a share of national income remained static in the UK at 1.3 per cent in 2007, while the average across countries of the Organisation for Economic Cooperation and Development rose to 1.5 per cent.

The OECD¡¯s Education at a Glance study, published today, reports that the US spent the most on higher education as a share of gross domestic product, up to 3.1 per cent from 2.9 per cent in 2006, while South Korea spent 2.4 per cent and Chile 2.0 per cent.

In terms of public spending on higher education as a proportion of GDP, the UK is among the lowest in the group, at 0.7 per cent.

Denmark and Finland both spent 1.6 per cent from public sources in 2007. In 2006, Canada spent 2.6 per cent of GDP on higher education, and public expenditure represented 1.5 per cent of GDP.

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Graduation rates in the UK have remained relatively unchanged, but the rapid progress of other countries over the past ten years means it has fallen from third in 2000 to 15th in the rank order, and three points below the OECD average.

Steve Smith, president of Universities UK, said higher education in the UK was still ¡°second only to the US¡± on many other measures, but he warned that its position was under threat because of the lagging investment.

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¡°This points to the UK being a highly efficient system, but we must question the sustainability of this position. At a time when many of our competitors are investing in higher education and research as a way out of the recession, we cannot afford to be left behind,¡± he said.

Wendy Piatt, director general of the Russell Group of research-intensive universities, echoed Professor Smith¡¯s warning, but added that limited funds should be more concentrated to avoid ¡°short-changing students, employers and, ultimately, the country¡±.

Responding to the publication of the report, David Willetts, the universities and science minister, said the government was ¡°determined to tackle¡± the challenges facing the sector, while Sally Hunt, general secretary of the University and College Union, called for ¡°urgent and decisive action¡± to address the situation.

Today¡¯s figures from the OECD come just days ahead of the new Times Higher Education World University Rankings, which will be published on 16 September.

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simon.baker@tsleducation.com