The paper focuses on the increasing cross-sectoral competition for public resources between various types of public sector institutions in Europe and its implications for future public funding for both higher education and academic research. The major implication is the fierce competition for public resources, studied in this paper from a cross-sectoral perspective, in which the future levels of public funding for higher education in tax-based European systems are highly dependent on social attitudes towards what higher education brings to society and the economy, relative to what other claimants to the public purse can bring to them.