What BREXIT Would Do To Britain’s B-Schools

Brexit text with British and Eu flags illustration

Brexit text with British and Eu flags illustration

Much has been said about the potential impact of BREXIT on higher education in the United Kingdom, but what is the view from inside one of its strongest academic communities? The UK’s business schools are not only amongst the sector’s leading faculties, they also enjoy some of the most direct associations with the companies and business groups so exercised by the prospect of a potential European Union exit.

A commentary by Simon Mercado, director of ESCP Europe’s London campus

A commentary by Simon Mercado, director of ESCP Europe’s London campus

There are well over 100 business schools in the UK and their performance power is quite astonishing. Of the FT’s list of Europe’s 50 top business schools in 2015, no less than 14 UK schools make an appearance.

Although this influence and success does not derive directly from EU membership, most business school leaders would argue that inside the EU, it is easier for us to recruit students and staff from across Europe, and gain access to other EU markets as foreign providers. EU membership also opens up additional funding streams (e.g. Horizon 2020) and opportunities for faculty and students to gain international experience through such programmes as Erasmus. Our ability to collaborate with experts and institutions from other European states is also assisted by being at the heart of the EU and the European Higher Education Area (EHEA). Whilst the likes of Switzerland and Norway have strong business school communities without EU membership, there are material advantages arising from being at the core of the Union.

ADVANTAGE OF EUROPEAN MEMBERSHIP

The real basis of argument for continued EU membership is the freedom of movement of goods, services, capital, and people that comes with it. The EHEA does not constitute a fully free internal market, but it does allow UK schools to “sell” their courses and services to a market of over 500 million. Last year, UK business schools claimed about a 10% share of the 125,000 (non-UK) EU students willing to pay for their degree education on UK soil. That is a lot of fee income. UK schools are also able to take their educational services (e.g. campuses and franchises) to other European markets with relatively little restriction. This same right of establishment has enabled European schools like my own, ESCP Europe, to invest freely in UK campuses, adding competition and diversity to the UK market. The ability of ESCP Europe to offer world-class rotational degree programmes across six campuses is massively assisted by the European market framework. In fact, the operational difficulties in such a system really extend from the limits to the Single Market, with its lack of harmonisation on VAT, employment law, and currencies. BREXIT would almost certainly complicate our business and what we see as an authentically transnational education model.

In essence, EU membership facilitates ease of trade and investment by eliminating administrative, technical, and regulatory barriers to cross-border mobility and investment. The sale of “spots” in UK-based schools is made easier by the price and administrative benefits of treating UK and EU nationals on a “non-discriminatory” basis. Accessing a UK business school as an EU national is materially easier than doing so as a non-EU national and comes with different rights with regard to post-study employment and loan financing. Non-EU nationals are typically subject to higher course fees and to burdensome visa requirements.

Universities UK shows that 14% of academic staff here are nationals of other EU member states. UK business school deans frequently identify a shortage of qualified faculty in areas like Finance & Accounting as a major issue. EU membership makes it easier for BSs to secure the services of qualified academics from other European countries almost “Europeanising” the talent pool and job market. Think also about the career options for UK academics and researchers who currently enjoy freedom to conduct their work in other European higher education systems. BREXIT does not put these options to death but it will add complications.

THE ISSUE OF STUDENT MOBILITY

If BREXIT occurred, EU students would continue to have access to UK business schools but would theoretically be subject to the administrative and pricing regimes applicable to non-EU nationals. It would also negatively impact on post-study working privileges and access to higher-education funding. At the same time, the 20,000 odd UK nationals currently studying in other EU countries may not enjoy access to overseas (European-based) higher education, which is generally available for free or at comparatively low fee levels. Moreover, 15,600 UK students took part in the EU’s Erasmus exchange programme in 2013-14 and the number is accelerating. Such experiences go a long way in helping our students to prepare for an increasingly international jobs market.

Much hinges on the nature of the partnership the UK would negotiate with the EU in the BREXIT scenario. Like Switzerland or EEA participants, the UK could agree to actively participate in most aspects of the Single European Market without full political membership. This would entail extensive negotiation, sector by sector. A post-EU UK could continue to participate in Erasmus, for example, if a bilateral deal was cut. But my concern here is with the impact of any period of uncertainty (and negotiation) and with what any future UK government would accept post-separation. This might be a long way short of an arrangement in which the UK secured largely unhindered access to the Internal Market in exchange for financial contributions and concessions on movement of persons — two of the central arguments for BREXIT. The collaboration model with Switzerland is also now in crisis. As the EU and Switzerland have fallen out over elements of co-operation, Swiss HEIs have seen suspensions in Erasmus participation and access to EU-funded research and education programmes.

FUNDING AND INVESTMENT

What I would really like to avoid is an outcome in which a post-BREXIT successor arrangement failed to convince those willing to invest in the UK.

EU programmes like Horizon 2020 channel financial and human resource capital into our schools and the higher education system in general. They also play a vital role in enabling collaborative research across European borders and in enhancing its scale and impact. In addition, the EU’s structural funds have enabled many business schools to develop infrastructure and capacity.

Admittedly, these transfers follow significant UK contributions to the EU budget. National investment might substitute or even exceed what UK HEIs currently secure under EU streams. Outside the formal structure of the EU, we would still find ways to collaborate too. But, with respect to financing, there is no certainty that, in the face of competing investment priorities, current (EU) funding levels would be matched.

WHAT REALLY MATTERS

We leave the biggest issue to last. Like other service businesses, we are better placed if the market is healthy and performing strongly, and if BREXIT leads to a weakened economic climate this will hurt us. The business leaders that we work with stress the advantages of European integration. They tend strongly towards a “remain” vote. I sense too that business school leaders feel that more international business education demands educational experience and collaboration across borders. We can get this outside of the EU, but most would contend that at the heart of Europe the task is easier and opportunity broader.

Author Simon Mercado is the director of ESCP Europe’s London campus.

About the Author...

John A. Byrne

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.