"I'm bilingual. I speak English and educationese," said Shirley Hufstedler, Jimmy Carter's Secretary of State for Education. In the academic world, it seems like a good combination.

Many institutions in Europe, particularly business schools, have accepted that English is the commercial lingua franca. Even the French, whose immortels in the Academie francaise devote hours to inventing French terms for Anglo-Saxon words such as "football" and "software" that creep into use, which they regard as tres beyond the pale.

There is now a range of courses being taught in English across France to a cosmopolitan array of students drawn to the weather and lifestyle of places such as Grenoble. While UK business schools might be sniffy about the quality of the English skills of the lecturers in such institutions, they cannot hide from the fact that they pose serious competition.

Even Switzerland now takes 23 per cent of its students from overseas, and there are 200 masters courses taught in English.

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Although many of those teaching in English across Europe will lack the fluency of native speakers, there is no doubting that learning English has become a pathway to a better education. And it hasn't harmed the coffers of the continental universities concerned, either.

Unfortunately, it could hurt the UK's. The prospect of polishing one's skills in the international language of business has long given UK universities an advantage. Take that away, and the competition gets fierce - especially when recession looms and a question mark hangs over course standards in the UK.

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In these uncertain times, the report from the Innovation, Universities, Science and Skills Select Committee, which is taking submissions on evidence of dumbing down in universities, will be more important than ever.

We must be careful with our reputation for world-class universities. Having promised to fund excellence wherever it is identified by the research assessment exercise, the Government and the Higher Education Funding Council for England have a tricky problem ahead: how to keep their word and spread the cash around without hitting the top research-intensive institutions too hard and harming our standing abroad. As with the Bologna Process, it's not always the reality of what we offer but also the perceptions that we must worry about.

At stake is more than just a revenue stream, albeit a vital one. Many countries view overseas students not just as a source of income for their institutions but also as a way to boost intellectual capital because graduates may stay on and work. Talented academics may decide to leave the UK to take up the new opportunities to work and live in Europe.

So just how great could the continental challenge to the UK be? For sheer entrepreneurial audacity, consider the IE University in Madrid. It has used a business school as the foundation on which to build a university instead of the other way around, and it unashamedly targets top-end international students by offering an Anglo-Saxon system rather than Bologna-favoured qualifications. It aims to challenge not only the UK but also North America. Cannily, students will be encouraged to learn another tongue, Spanish, now the second most used language in the US and vying with English for dominance in the West.

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Those who want to get ahead in a globalised world cannot afford to be tied to one tongue. In 2009, will Barack Obama's Education Secretary boast of being trilingual?