Britain’s universities are being dragged down by falling levels of research funding and employing fewer highly qualified staff than their international rivals, according to the compilers of a prestigious world university league table.

The QS world university rankings for 2018, published on Thursday, show the majority of British universities slipping down its table, with 57 of the 76 UK institutions receiving lower ratings than last year despite British universities occupying four of the top eight places.

“Put simply, this year’s results indicate that the UK’s universities are becoming less competitive as research-driven institutions,” said Jack Moran, rankings auditor for QS, a London-based higher education thinktank.

The UK’s relative performance has deteriorated because of weaker research performance, with fewer research citations received from fellow academics, and lower scores on academic reputation at home and abroad, according to QS researchers.

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“The competitiveness of UK universities has been affected by austerity. In particular, tuition fees have been frozen for five years and research funding has not grown as fast as in some other countries. So the latest QS rankings should give policymakers pause for thought,” said Nick Hillman, director of the independent Higher Education Policy Institute.

The world rankings were headed by the US powerhouses of Massachusetts Institute of Technology (MIT), Stanford and Harvard universities. The University of Cambridge was overtaken by Caltech, the California Institute of Technology, in fourth place, which were trailed by the University of Oxford and University College London in sixth and seventh.

Imperial College London bucked the trend by rising from ninth place last year to eighth, ahead of the University of Chicago and Switzerland’s Federal Institute of Technology in Zurich.

The University of Edinburgh fell out of the top 20 to 23rd place, equal with King’s College London, while the University of Manchester dropped from 29th to 34th. More happily, the London School of Economics continued its recent international success by nudging up to 35th from 37th.

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The overall UK decline continued a trend seen in last year’s rankings, which Ben Sowter, QS’s head of research, said was more the result of low funding than the impact of Britain’s rejection of EU membership in the referendum. “Much of the data we collect for these tables has been collected over a five-year period, and the first year of post-Brexit internationalisation scores suggests that there has, thus far, been a minimal impact on international student and faculty rates at UK institutions,” Sowter said.

“Of greater importance, we believe, is the continued strain on university resources, which appears to be having a deleterious impact on not just research, but also the capacity to deliver world-class teaching.

“Also of greater significance than Brexit is the simple and unavoidable truth that these rankings are a relative exercise, and the rest of the world is becoming increasingly competitive.”

The Russell Group of leading UK research universities saw 16 of its 24 ranked institutions fall down the league table. “Of course, there is always room for improvement, and maintaining our global position in teaching, research and innovation requires investment,” said Tim Bradshaw, the Russell Group’s acting director.

“For a number of years, funding for teaching has been squeezed. The position is particularly acute in engineering and some of the sciences, where the need for specialist facilities, equipment and technical support adds to the cost of teaching. This is something that the new government will have to look at closely if universities are to deliver the jobs and growth that we all want to see for the UK.”

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British universities did continue to shine in the eyes of international employers, with Cambridge and Oxford ranked first and second for reputation based on a survey of 40,000 employers worldwide. The LSE also punched above its weight, in seventh place.

Despite the US’s lofty position at the head of the overall rankings – with MIT top for the sixth year in succession – its institutions also showed signs of faltering, with 71 of its 147 ranked universities receiving lower scores this year.

In their place were rising stars such as Singapore’s Nanyang Technological University (NTU), which opened just 26 years ago but is now rated 11th in the world. NTU bis now the highest ranked Asian institution ever.

“The future looks very positive for NTU. Today, young and upcoming scientists make up 8% of our faculty, but they account for almost 40% of NTU’s citations in top research journals,” said Professor Bertil Andersson, NTU’s president.