London universities join growing list of institutions pushed into financial deficit

Birkbeck, University of London and London Metropolitan University have each reported financial deficits for the 2025-2026 academic year, joining half of all higher education institutions in England. 

Times Higher Education reports Birkbeck at a deficit of £7 million, and London Met at £12 million, with a total income drop of £20 million. 

These are not unique cases. The Office for Students published a financial sustainability update in November 2025, with around 45 per cent, or 124 higher education providers, reported to be in a deficit for 2025-2026. 

The update followed the Office for Students’ annual report in May 2025, which detailed the financial condition of the higher education sector in England based on data from universities, colleges and other institutions.

De Montfort University in Leicester attributes the “tricky economic climate” to the increased costs but decreased real-terms value of tuition fees, and over-recruiting of home students by some institutions to make up for their financial shortfalls.

The major decline in international students is also a significant factor, a result of “overcomplicated visa policies, rising tuition fees, and course cancellations,” according to the International Business Times.

The OfS also says institutions have been overly optimistic with their student recruitment forecast, especially for international students. These institutions previously predicted some level of improvement in their financial outlook in 2025-2026, after predicting deficits for three consecutive years. 

According to OfS’ modelling, financial recovery of the sector could continue to weaken at least until 2027-28.

London Metropolitan University via Google Maps

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Despite the deficit, a spokesperson for London Met said: “London Met remains stable. We are debt-free, hold healthy cash reserves, and continue to invest in our estate and digital infrastructure. The speed with which we have been able to post our results reflects the confidence our governing bodies and auditors have in our financial stability and status as a going concern.

“Our financial planning is focused on sustainability, with proactive, measured decisions to manage resources carefully. We have a clear plan to return to surplus while maintaining the high-quality experience our students and staff deserve.”

Commenting on the OfS’ analysis, Director of Regulation at the OfS, Philippa Pickford, added: “Universities now have welcome clarity over tuition fee levels in future years, and we also know that many institutions are continuing to take significant steps to cut costs, work collaboratively with partners and seek opportunities for realistic growth.”

“They are also becoming more realistic and prudent in their planning, including tempering ambitions for recruitment that are too optimistic.”

The Tab has reached out to Birkbeck, University of London and London Metropolitan university for comment.

Featured image via Unsplash and Google Maps