National income circulates around the economy – between
households and firms. An injection into the economy (such as one arising
from exports of UK higher education), therefore, will also circulate,
leading to an overall effect greater than the initial injection. There is no
precise estimate of this multiplier effect, whose value depends upon a
range of variables, such as the current state of the economy, and the
nature of the industry generating income. The excellent Universities UK
report “The economic impact of UK higher education institutions”4
gave a
range of different multipliers, including a multiplier of 2.52 for income
generated by the higher education "industry". The outputs of higher
education do not of course work in the HE industry, but in the full range of
industries, and for the purpose of this report – and in keeping with the
intention of creating conservative estimates – we have used a multiplier of
1.5 throughout (i.e. for every £1 of direct output a further £0.50 is
generated elsewhere), which is at the lower end of the range identified in
the Universities UK report.