Declining STEM graduate numbers could cost major economies trillions, report warns

MAJOR economies including China, the US, India and the UK risk losing trillions of dollars in economic output over the next decade as STEM graduate numbers fail to keep pace with growing industry demand, according to a new report.

The latest STEM Skills Outlook from the Centre for Economics and Business Research (CEBR), developed with workforce intelligence company SThree, warns that shortages of STEM talent are increasingly limiting growth in high-value industries.

STEM industries account for almost 15% of global economic output, but the report suggests many countries are struggling to build the skilled workforce needed to support future growth.

China faces the largest potential loss, with the report estimating that STEM skills shortages could put US$3.2tn of economic output at risk over the next decade. The US could lose US$1.4tn, while India faces losses of US$800bn. The UK alone is projected to risk US$208bn in lost output.

Graduate decline

The report identifies a growing mismatch between STEM dependence and graduate supply. Many sectors, including engineering, advanced manufacturing, biotechnology and data science, rely heavily on degree-qualified workers, making graduate numbers a key determinant of future economic performance.

While some countries are strengthening their talent pipelines, others are moving in the opposite direction. Iceland, Indonesia and Ireland have all recorded growth in STEM graduate numbers over the past decade. By contrast, Czechia and Bulgaria have experienced annual declines despite growing reliance on STEM industries.

Cross-border support

To address the shortfall, the report calls for greater international collaboration on skills and recruitment, warning that countries with shrinking graduate pipelines may become increasingly reliant on attracting talent from overseas.

“The most acute pressure is concentrated where STEM dependence is high and graduate pipelines are already in decline,” the report states.

“Without policy intervention, [this] is likely to translate into measurable output losses and intensified demand for cross-border talent mobility and specialist recruitment.”

The findings come as the UK seeks to attract overseas researchers and engineers to support growth in areas such as AI and advanced manufacturing.

A spokesperson for the UK Department for Science, Innovation and Technology, said: “We want the very best STEM talent to come to the UK to advance their work, with our Global Talent Fund playing a key role in bringing leading expertise to our shores.

“This is already bearing fruit, with researchers leading cutting edge research from AI to research tackling diseases like Huntington’s supported to come to the UK as recently as last week.”