The big question for wealth creators: is there a future in Britain?
A tax-raising Budget has completely undermined confidence in the UK’s ability to remain competitive, says Philip Harris
A Budget that prioritises tax rises heightens investor friction, accelerates capital flight and weakens the UK’s competitiveness. It undermines the foundations of long-term prosperity and forces families, entrepreneurs and wealth holders to ask a serious question: is the UK still the right place to build a future?
Even before the official statement came, there was already a sense of trepidation brewing around the country. When the Budget finally landed, these concerns proved well founded. We saw a £26bn tax-rise package, frozen thresholds, and a new levy of £2,500–£7,500 on properties valued above £2m, combined with a panoply of other measures targeting wealth, savings and property.
On paper, some will argue this is just progressive redistribution – those with the “broadest shoulders” carrying the heaviest burden. In principle, yes, but in practice, the unintended effect is even more concerning. For peripatetic entrepreneurs and business owners, their talent and capital are more mobile than ever, and what this Budget does is completely undermine confidence in the UK’s ability to remain competitive.
Geography gives the UK certain advantages, as it exists midway between the financial capitals of the Americas, Europe and the Gulf. But geography alone is not destiny enshrined, and neither can it counterbalance a punitive fiscal policy that penalises those people who take the initiative and invest, grow businesses and create jobs. What we are witnessing are plans that – perhaps inadvertently – target the engines of investment and enterprise just when they are most needed.
Time and again, I have seen Budgets shaped less by economic logic than by ideology: dogma masquerading as policy. When governments impose self-inflicted rules and constraints, they introduce distortions – often with little benefit. Cutting the annual limit for ISAs may look prudent on paper, but it does little to address underlying growth challenges.
Redistribution may make for compelling headlines, but it rarely delivers the outcomes its proponents imagine. In effect, it stymies living standards rather than uplifting them. By alienating entrepreneurs, investors and families who generate economic momentum, we risk stifling growth and innovation, along with long-term opportunity for all.
Capital flight
At the moment, the signs of capital flight are real. Research by Henley & Partners forecasts a net migration of 142,000 millionaires leaving the UK this year, taking an estimated $63bn in wealth with them. The leading beneficiary of this? The UAE, but that’s not the only destination. Countries such as Portugal and the United States are also increasingly appealing to those seeking stability, lower friction and a more predictable environment for wealth and investment.
This kind of exodus has predictable consequences. For me, it calls to mind the economic principle described by the Laffer curve, where excessive taxation can ultimately reduce total revenue – a theory that remains painfully relevant today. If high contributors leave, the tax take shrinks, but the government still needs to fund its commitments, so the burden then shifts elsewhere. How can that be considered responsible governance?
Nor is it true that the wealthy do not contribute their fair share. According to data from HMRC, 0.1 per cent of the working population pays more in tax than the bottom 50 per cent. Even more striking, 0.01 per cent, that’s roughly 4,000 individuals, pay more than the bottom 25 per cent combined. If policy drives even a fraction of those away, the contraction of the tax base will be disproportionate, and leave us with serious long-term consequences.
Viewed in isolation, this Budget might appear as just another fiscal recalibration. In context, it represents the cumulative effect of a gradual erosion of the UK’s attractiveness as a home for global capital, which rewards entrepreneurship and enterprise. The policy direction reduces after-tax returns across key assets such as property, private enterprise and family business precisely when competing jurisdictions are lowering friction and opening their doors even wider.
That is the quiet danger no government forecast can fully capture: a long-term hollowing out of investment, innovation, economic resilience and tax receipts. Once these flows are lost, they are not easily recovered
What we’re losing is not just short-term investment: we risk losing long-term commitment. Families and entrepreneurs don’t simply rebalance portfolios, they merely decamp, choosing freedom, opportunity and structural clarity over uncertainty and crippling tax codes. And once roots are relocated overseas, the capital, ambition and entrepreneurial momentum takes generations to return.
That is the quiet danger no government forecast can fully capture: a long-term hollowing out of investment, innovation, economic resilience and tax receipts. Once these flows are lost, they are not easily recovered.
The path forward for the UK should be obvious. We must refocus policy on retaining talent, encouraging investment and preserving competitiveness. Reform is inevitable, sometimes necessary, but it should be designed to fortify, not fracture, the foundations of growth that the country requires.
Let’s craft fiscal policy that rewards enterprise, supports wealth creation and incentivises long-term investment for the benefit of the entire country. That does not mean abandoning reform. It means designing it intelligently, with an understanding of where growth and prosperity actually originate.
Philip Harris, CEO of Arbra Partners