New index reveals Reeves’ Budget has downgraded the value of a British passport
Britain’s attractiveness as a destination for entrepreneurs and investment has been badly affected by Rachel Reeves’ Budget, according to a respected international index.
The latest annual Nomad Capitalist Passport Index suggested that tax rises were increasing barriers to employment and that the removal of non-dom status in the UK was damaging the country’s reputation abroad.
The index revealed that the UK dropped 14 places from 21st place in 2024 to 35th place.
This decline was the largest among G7 countries; The UK superseded a number of European peers, including Bulgaria, Greece, Romania, Czech Republic, Italy and Hungary.
The fact that the only EU countries below the UK are the Netherlands and Austria raises concerns that Brexit continues to harm Britain’s competitiveness.
The findings are a blow to Ms Reeves and Sir Keir Starmer’s election promises that economic growth would be the Labor government’s top mission.
Instead, a record £40bn tax increase in the first budget in 2024 was followed by a £26bn tax increase last month as Labor struggled to find money for increased NHS and welfare spending, with the aid bill set to rise to more than £400bn.
Khatia Gelbakhiani, head of growth at Nomad Capitalist, blamed tax increases on jobs, property and the wealthy for the UK’s decline in competitiveness.
He said: “The UK’s index collapse is no coincidence but the direct result of policy choices made by the Labor government.
“The abolition of the non-dom regime, the move to a residence-based system that means taxation for many on an increasing basis around the world, and a Budget built around increasingly higher taxes have fundamentally changed the way the UK is viewed by globally mobile entrepreneurs and internationally active families.
“Freezing income tax thresholds, increasing taxes on dividends and property income, capping the National Insurance deduction for salary sacrifice pension contributions and introducing a mansion tax on homes worth over £2 million send a clear signal that success is something to be punished rather than welcomed.”
He added: “The result is clear in the data. The UK has experienced the biggest decline of the G7 because globally mobile people respond to incentives, certainty and long-term stability. When governments keep changing the rules and increasing the cost of staying, people don’t argue. They go where they are treated best.”
The government said Sir Keir and Ms Reeves were now targeting costs of living, highlighting their decision to scrap the child benefit cap, which costs UK taxpayers a further £3.5bn a year.
It also targeted cost-of-living issues, such as freezing rail fares next year and providing additional childcare support.
Attempts to cut welfare spending by £5bn were stalled following an uprising by Labor MPs ahead of the summer.
Shadow chancellor Sir Mel Stride said: “By penalizing success and raising taxes, Labor is sending the wrong message to the world: ambition is not welcome in the UK.
“Rachel Reeves’ choices make it harder for investment, innovation and ambition to thrive, but it doesn’t have to be this way.
“The future Conservative government will cut taxes, attract investment and wealth creators to the UK and end its war on Labour’s ambitions.”
Independent He sought comment from the Treasury.
