LONDON - Britain's universities are being given an uncomfortable reminder of the depth of the recession as the government slashes their budgets and urges them to focus on degrees that will directly benefit the economy.

That means less of the philosophy and art history and more of the vocational subjects like engineering and law.

Business Secretary Peter Mandelson said he also wants to see universities cut some of their usual three-year courses to two as a way of saving money.

His plans have caused outrage in the groves of academe.

Teaching unions said the announcement was a Christmas kick in the teeth that would lead to job cuts and a two-tier education system which benefits privileged students.

But the government said the changes would help cut public spending, make universities more flexible and create more graduates able to contribute to the economic recovery.

The economic situation is extremely challenging, said Mandelson. Across the public sector we are all facing difficult choices. We will want some shift away from full-time, three-year places and toward a wider variety of provision.

The higher education budget will fall next year by 533 million pounds ($853.4 million) to 7.3 billion pounds and universities were told to stay within limits for new students.

Budget cuts could prove tricky for Gordon Brown's center-left Labour government, trailing in the polls before an election due by June. The prime minister has said voters face a choice between Labour spending and opposition Conservative cuts.

FOREIGN INCOME

Overseas students will be a crucial source of income for British universities in the years ahead, the government says.

After the United States, Britain is the second most popular destination for foreign students, according to Higher Ambitions, a government report cited by Mandelson.

About 340,000 overseas students attend UK universities, while a further 200,000 take British qualifications while studying in their home country.

Higher Education Minister David Lammy said universities must play their part in easing the pressure on public finances.

But the University and College Union, which represents 120,000 academics, said the changes would damage universities and lead to job cuts and bigger class sizes.

It is a real Christmas kick in the teeth for staff and students, said UCU General Secretary Sally Hunt. You cannot make these kinds of cuts and expect no consequences.

The National Union of Students said it feared shorter degrees would provide higher education on the cheap.

The scheme must not be about forcing poorer students to choose courses that are not right for them, said NUS President Wes Streeting.

(Editing by Steve Addison)

United kingdom Christmas