European societies have been urged to commit 2 per cent of their gross domestic products to higher education as part of the "urgent action" needed to prevent them losing out to the US and Asia.

A manifesto calling for more differentiation between teaching and research universities, greater autonomy from government and increased internationalisation was drawn up at a meeting of 20 experts at the University of Maastricht's Brussels site last week.

The signatories included Jo Ritzen, Maastricht president and former Dutch education minister, Baroness Blackstone, former UK education minister, Helga Nowotny, president of the European Research Council, and Eduardo Grilo, former Portuguese education minister.

The manifesto was presented to Androulla Vassiliou, European commissioner for education, culture, multilingualism and youth. It calls for urgent action by universities, European Union member states and the European Commission, and warns that the poor performance of most European universities in world rankings should be seen as an "alarm signal".

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Europe needs to attract students from around the world to meet a shortage of skilled graduates, the manifesto argues, but governments are no longer able to inject extra funds into higher education. The manifesto instead highlights the need for increased private investment such as graduate contributions and business funding.

"Private funding for higher education is still one of Europe's weakest spots," the manifesto says. "We would plead to raise the contribution of society to higher education (excluding research and development) to 2 per cent of GDP by 2015, being well aware that the economic return on such investment is far above that of the alternatives."

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The UK spent 1.3 per cent of GDP on its academy in 2006, according to the most recent figures available from the Organisation for Economic Cooperation and Development.

Many of the signatories criticised the lack of institutional autonomy in European higher education. Governments often control universities' staff contracts, buildings and admissions policies.

Philippe Aghion, Robert C. Waggoner professor of economics at Harvard University, said higher education's ability to deliver faster economic growth rested on two key factors: its ability to produce employable graduates and innovation in research.

Universities' performance in getting graduates into jobs needed to be measured more effectively, he argued, with a greater emphasis put on selection of students.

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Professor Aghion, who is advising the French government on its higher education reforms, said university autonomy and performance were directly linked.

"The more autonomous you are, the better you perform," he said. However, autonomy had to be accompanied by adequate financing.

Funding was a key topic in the debate. Baroness Blackstone, vice- chancellor of the University of Greenwich, called for more teaching funding for institutions with a widening-participation remit.

Moving towards the American model of high fees for students would be "hugely dangerous" for Europe, she said: instead, the peer advocated a mixed system of graduate contributions and state funding.

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Many of the participants at the meeting suggested that the UK model should be emulated.

Peter Gaehtgens, former president of the Free University of Berlin and the German Rectors' Conference, said: "Germany and France do so much worse compared with the UK. A large part of that is the autonomy that UK universities have had for a long, long time."

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Professor Gaehtgens said it would take "more than 50 years" to boost the autonomy of continental universities and focus their mentality on student outcomes. "A German university doesn't take care of its students," he said. "It doesn't care about the future of its students."

john.morgan@tsleducation.com