The introduction of a levy on overseas tuition fees in?the UK?could deter tens of thousands of international?applicants and trigger 135,000 fewer university places for domestic students, a new report?has concluded.

Research?by consultancy firm Public First commissioned by several leading universities shows that the impact of the proposed 6 per cent levy on universities and regional economies?would be more severe than the government has estimated.

The immigration?White Paper released earlier this year modelled the impact of price changes on students from the European Union ¨C but Public First¡¯s research found that?those from outside the EU would be three times more likely to be put off in the first year.

It projected that the sector would lose a combined 16,100 students (?240 million lost in fee income) in the first year the levy is introduced ¨C and more than 77,000 in the first five years.

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Because of?cross-subsidisation, Public First said the reduction in overseas numbers could lead to 33,000 fewer domestic students in the first year, and 135,000 fewer over five years.

Alternatively, the report showed that if the reduction in revenue were paid for from the research budget, it would shrink the money available for R&D by 1.5 per cent. Over five years, this would be the equivalent of the entire increase in the defence budget announced in the 2025 spring statement.

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The policy could also wipe about??2.2 billion from the UK economy in just five years, but the knock-on economic impacts would probably be much higher.

The 10 most affected constituencies ¨C in London, Coventry, Manchester, Glasgow and other cities with large student populations ¨C would each lose an average of ?40 million annually in economic activity.

Holborn and St Pancras, prime minister Keir Starmer¡¯s constituency, would be worst affected ¨C standing to lose ?72 million.

Jonathan Simons, author and partner at Public First, said the financial impact on universities is much more ¡°severe¡± than previously thought ¨C leading to further job losses when so many are already in deficit.

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¡°Perhaps even more significant, though, is the hit an international student levy could cause to local, regional and national economies across the UK.

¡°It is not widely understood just how much our economy is supported by international students and it¡¯s really crucial that any policy that could affect international student numbers is considered through this lens.¡±

Previous analysis has shown that the proposed levy could cost English universities ?620 million per year, with some institutions facing bills of more than ?20 million each.

Vivienne Stern, chief executive of Universities UK, said the report raises further concern around the levy and is a reminder of the importance of international students to ¡°high streets, workplaces and campuses¡±.

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¡°They contribute billions to the economy, and this further evidence shows how their fees ensure more opportunity for British students and support our innovative research.?

¡°As we approach a Budget which aims to secure economic growth and help struggling communities, we would urge policymakers to take note of this report and think carefully about the impact that a potential levy on international student fees could have.¡±

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patrick.jack@timeshighereducation.com