This is a real downside and something I personally encountered (although I live in a different country). Even in areas such as condensed matter theory, projects became insanely applied to where they were borderline projects you would essentially expect in industry.
Even some of the top cond matter theorists in my old departments [who are less applied but nonetheless work in standard (real world scenario) areas e.g. optics, many body theory etc.) have barely managed to obtain funding for a PhD student for the past couple of years (unless it came directly from the department)