Expert View: We're losing the battle for our brightest young minds

Academic pay here is half what it is in the States - those tweeds are getting threadbare
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It is a sad to realise that your inclusion in a "bright young City things meet the grey beards" dinner, is because you fall into the second category. In the event, while it was a stimulating evening, jet-fuelled with the creativity of youth, it was also a sad one for another reason. Almost all these young Brits had chosen to round off their educations in the US, and to pursue their careers there. Their world views reflected those of their alma mater.

Like so many aspects of our lives, higher education has become a competitive, globalised business, and one in which the Americans are winning. In the first half of the last century, only 28 Nobel prizes in science went to US citizens. In the second half it was 159, and most of the rest went to non-Americans working at US institutions. The Economist recently published a survey of the world's universities in which 17 of the top 20 were American.

This success is proving a magnet for talented youth, particularly from these shores. Some 8,400 UK students now study in the States. By contrast, just 900 US students have elected to study here.

Money plays a big role in this phenomenon. I was at a US campus a few weeks ago and the sheer scale of its endowment was breathtaking. In Harvard's case, their $23bn (£13bn) is more than the endowments of all the British universities put together. Even Oxford and Cambridge, which are not short of funding, have a combined wealth of $5bn. If based in the States, they would rank no higher than 15th in the university wealth list.

Awash with all this money, US universities have pressed home their competitive advantage. With the European reliance on state funding and the strain on public coffers, academic salaries here have plummeted and the temptation for students to seek foreign scholarships has increased. We spend 40 per cent less public money on students than we did in 1976. Academic pay here is around half what it is in the States - those tweeds are getting threadbare.

At the same time, in Britain, the high degree of autonomy given to academics, the extraordinary security of tenure and the failure of most universities to behave in the kind of corporate way the Americans do, have made universities in the US look still more attractive.

The effects of this triumph are not to be underestimated. With the bounce-back in the world business climate has come a return of what the Nineties christened the "war for talent". European investment banks have raised their graduate intakes by 20 per cent this year, and the top five American banks are together hoovering up some 8,000. Competition for the best is intense. I am told that Deloitte now offers £1,000 interest-free loans as a carrot to cash-starved students.

For the very best, such as those at the dinner, this is a sellers' market, and the perception they have of European versus American institutions is not in our favour. The bankers were frightening in their US-centric view of business life, business ethics, and the world in general. One claimed how much more focused US politicians were on international issues than their UK equivalents.

The Americans are not carrying all before them, though. While every Brit and his satchel may be heading across the pond, the paranoid climate in the US since 11 September has been affecting its academics' marketing efforts in the rest of the world. Restrictions on educational visas have dented the appeal of US institutions. The number of Chinese students studying there fell an extraordinary 45 per cent last year. In contrast, their number here is rising, and there are now nearly 38,000.

While my young blades show every sign of becoming Wall Street grey beards, a future City dinner will still have some, exotic, wise men.