UNIVERSITY leaders have warned the Scottish Government that only "sustained public investment" will keep the sector competitive in the future.
Professor Pete Downes, convener of Universities Scotland, which represents university principals, said public funding of institutions across the UK was falling behind in comparison to other countries.
His comments come after the Scottish Government confirmed last week in its annual letter of guidance to the Scottish Funding Council (SFC) that it will invest some £1.06 billion in the higher education sector in 2014/15.
This represents an increase on the previous year of 1.8% - or £19 million - , but it still represents a fall in real terms when inflation is factored in.
Scotland - along with the rest of the UK - already invests a lower percentage of GDP in its higher education system compared to other European countries.
And although Scottish universities have seen a strong showing in international league tables, with five in the top 200 in the world, some have lost ground to international competitors.
Mr Downes accepts that, in the context of other spending decisions, the latest investment demonstrated "continuing strong support" for higher education by the Scottish Government.
But he said: "What it means is that funding will remain quite flat and decline somewhat in real terms in the medium term.
"I will continue to make the case for investment less the UK falls even further behind the OECD [Organisation for Economic co-operation and Development ] average for the percentage of GDP spent on higher education.
"A range of international league tables show clearly that while UK higher education is just about maintaining its levels of investment and reputation, our competitors are investing more and improving faster.
"Sustained public investment is essential to maintain the competitiveness of Scottish higher education and its leverage in the marketplace as the economy moves out of recession."
Commenting on the latest letter of guidance, Michael Russell, the Education Secretary, said: "The guidance I am setting out will ensure there is no let-up in making Scottish education even better and further strengthening the contribution education makes to growing the economy."
A Scottish Government spokeswoman added: "We have allocated £1.061bn to Scottish universities in the draft budget for 2014/15, a rise of £19m from the planned budget in 2013/14.
"The Education Secretary has set out clear priorities, including continued excellence in teaching and widening access, in his guidance to the Scottish Funding Council. This will now be taken forward by the SFC and universities."
Meanwhile, in a separate development, students across the country are set to face disruption this week as academics and administrative staff stage a one-day walkout in an ongoing row over pay.
The University and College Union said it was expecting tens of thousands of members to take part in the action across the UK on Thursday, which could see lectures and tutorials cancelled.
The Universities and Colleges Employers' Association, which represents and negotiates on behalf of institutions has said it is "disappointed" by the move, but predicts a "low level impact" on students.
The unions argue that a 1% pay rise offered to university staff - including lecturers, technicians and administration workers - means there has been a 13% pay cut in real terms since October 2008.
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