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Britain’s attractiveness as a destination for entrepreneurs and investment has been badly hit Rachel Reeves’s budgetAccording to a reputed international index.
The latest annual Nomad Capitalist Passport Index suggests that tax rises have increased barriers to employment for people and the abolition of non-dom status in the UK has caused harm. Country’s reputation abroad.
The index showed that Britain is set to fall 14 places from 21st to 35th in 2024.
This decline is the biggest decline among G7 countries Several European peers, including Bulgaria, Greece, Romania, the Czech Republic, Italy and Hungary, trailed Britain.
The only EU countries ranked below Britain are the Netherlands and Austria, raising concerns that Brexit is also hurting Britain’s competitiveness.
The findings are a blow to the election promise of Ms Reeves and Sir Keir Starmer that economic growth would be the Labor government’s number one mission.
Instead a record £40bn tax rise in the first Budget in 2024 follows a £26bn increase last month, as Labor tries to find money for increased NHS and welfare spending, with the benefits bill set to top £400bn.
Khatia Gelbakhiani, chief development officer at Nomad Capitalist, blamed Britain’s decline in competitiveness on rising taxes on jobs, wealth and the rich.
He said: “The UK’s decline in the index is no accident. It is a direct result of the policy choices made by the Labor government.”
“The abolition of the non-dom regime, the shift to a residence-based system, which has meant, for many, worldwide taxation on an arising basis, and budgets built around the highest taxes have fundamentally changed how the UK is viewed by globally mobile entrepreneurs and internationally active families.
“Freezing the income tax threshold, increasing taxes on dividends and property income, limiting National Insurance relief on salary sacrifice pension contributions and imposing a mansion tax on homes over £2 million sends a clear signal that success should be punished rather than welcomed.”
He said: “The results are clear in the data. The UK has suffered the biggest decline in the G7 as globally mobile people respond to stimulus, certainty and long-term stability. When governments keep changing the rules and increasing the cost of living, people don’t argue. They go where they are treated best.”
The government has said it is now targeting the cost of living, with Sir Keir and Ms Reeves highlighting the decision to scrap the cap on child benefit which is costing the UK taxpayer an extra £3.5 billion a year.
It has also targeted cost of living issues such as reducing rail fares next year and providing additional child care support.
Efforts to cut welfare spending by £5 billion were abandoned following a rebellion by Labor MPs before the summer.
Independent Comment has been sought from the Treasury.