We have reason to be optimistic about the future

The common logic is that demand for an MBA is counter-cyclical with the rest of the economy. When business booms, young professionals are keen to make the most of a buoyant job market rather than spend their time studying. But when business heads south, applications to MBA programmes typically soar as people look to sit out the downturn by developing their managerial skills, graduating into a brighter job market a year or two later.

So what happens to MBA demand when the economy fails to recover over an ever-lengthening period of time? Numbers released by the Graduate Management Admissions Council (GMAC) don't make for attractive reading: 62 per cent of full-time, two-year programmes in the US reported a decline in applications in the past year. Those with close ties to the financial markets were hit particularly hard, with applications at New York's Columbia Business School and NYU Stern dropping by double-digits.

The idea of giving up any job you might have to go back to school seems to be looking less appealing. Instead, many students are turning to part-time or online distance MBA programmes so they can continue to work as they study. The other area of growth is in specialised Masters programmes in fields such as management, accounting and finance. Posting a fifth consecutive year of growth in demand, many of these are proving popular with students who have enrolled on them straight out of university.

All of this should be good news for business schools in Europe, many of which offer a shorter full-time programme, and a wide range of specialised Masters. But the persistent gloom in Europe's economy could now be taking its toll on MBA intake. Class sizes at a number of top European MBA programmes could have shrunk by as much as 20 per cent this year. In Spain, which had become one of the favoured destinations in Europe for an MBA, the business education sector is apparently beginning to feel the effects of the economy's woes. And in the UK, despite reassurance from Bank of England governor Mervyn King that the country is "beginning to see a few signs of a slow recovery", the decision to place restrictions on UK visas for highly skilled migrants is sending a message that makes many potential applicants look elsewhere.

In Germany, Berlin's European School of Management and Technology (ESMT) is bucking the trend in terms of MBA applications. "We've seen an increase of about 40 per cent so far for our January 2013 full-time MBA intake, which seems to be at odds with many other European schools," reports programme director Nick Barniville. He sees several reasons for this. "The German economy is still strong and jobs are available for MBA graduates. And while countries such as the UK are tightening visa regulations for graduates and turning away bona fide students, Germany continues to liberalise the right to work for non-EU graduates."

The German attitude to work visas must be the envy of business schools in the UK. Since August 2012, visa applicants with a recognised university degree and a job offer paying more than €45,000 get an automatic work permit. In the case of fresh MBA graduates from a German business school, they have 18 months to find such an offer and can work part time in the interim.

Elsewhere in continental Europe there are signs of quiet confidence. The Vlerick Business School is adding a campus in Brussels to its presence in Leuven, Gent, St Petersburg and Beijing, and has launched a major rebranding project. Philippe Haspeslagh, the school's dean, describes the move as part of a growth strategy to meet today's global challenges. "Business schools have to step up their game to remain relevant. They all feel the pressure to be more business-oriented and customer-focused. The economic context has encouraged us to focus our strategy and to be even closer to our customers than we've been before."

Haspeslagh insists that return on investment and reputation are more important to MBA students than ever before, and notes that the school's MBA intake this year has climbed by 15 per cent on the back of a one-year course length that offers value for money and a pragmatic approach to international business.

Other schools maintain that concerns about the impact of the euro crisis on the job market could simply be overblown. Graduates at HEC Paris in France are making the most of the school's proximity to Europe's largest concentration of multinationals with multiple job offers from the likes of L'Oréal, Lafarge and GE, as well as consulting firms such as McKinsey and A.T. Kearney. The newly minted MBAs may start at the European headquarters, but will have great opportunities to help their employers with growth in developing markets.

"Our new MBA curriculum reflects the demands of recruiters for MBAs who understand the demands of global business, but also understand European culture," explains the school's associate dean, Bernard Garrette. "Whether it is the likes of Amazon and Facebook who are looking to build their European presence, or luxury brands looking further afield, they want a diverse pool of graduates who can roll up their sleeves and focus on business development."

With clear signs that business schools in continental Europe are very focused on the future, is there a risk that their counterparts in the UK will fall behind? Warwick Business School tried to pre-empt the economic headwinds by restructuring the full-time MBA programme 15 months ago. They have since hired more than 60 faculty and staff, including some of the big names in behavioural science to develop a curriculum around decision theory and negotiation skills.

"It's important to offer an MBA that is different," says the Warwick dean, Mark P Taylor. "The course we have developed with the Royal Shakespeare Company is a good example, teaching students about leadership and creativity. We have also made a conscious effort to increase external engagement, bringing in senior executives to talk about their corporate and entrepreneurial experiences. Such real-life learning complements the management theory of the MBA very well."

The school has also overhauled its career services, with more sophisticated online technology to serve both existing students and those who are two or three years out of the programme. Taylor says that the various initiatives are resonating with students, and hopes that a more sophisticated visa policy in the UK will continue to attract the best and brightest applicants. "It's in the country's interest to attract the world's best talent. Why you would want to stop that makes no sense."