The United Kingdom is witnessing an unprecedented exodus of its wealthiest residents, a trend that has significant implications for its economic and political landscape. According to recent forecasts, the UK is set to lose 9,500 millionaires in 2024, a dramatic increase from the 4,200 who left in 2023. This net outflow places the UK second only to China in terms of millionaire departures, a sobering reflection of the country’s current climate for high-net-worth individuals (HNWIs).
Several interlinked factors contribute to this exodus. The aftermath of Brexit continues to ripple through the economy, with London no longer perceived as the undisputed financial hub of the world. Despite efforts to retain financial institutions, such as the removal of EU-imposed limits on bankers’ bonuses, the City of London struggles to maintain its preeminence. The war in Ukraine and the resulting energy crisis have exacerbated the situation, hitting the UK harder than any other Western European country due to its heavy reliance on gas. Consequently, inflation has soared, significantly impacting the cost of living.
Adding to the economic woes, the UK has faced substantial political instability. In a short span in 2022, three Conservative prime ministers—Boris Johnson, Liz Truss, and Rishi Sunak—took office, each bringing their own set of challenges and uncertainties. Johnson’s scandal-driven exit, followed by Truss’s brief and economically disastrous tenure, and finally, Sunak’s current administration, have all contributed to a shaky investment climate.
Less than 18 months into Sunak’s tenure, the UK is bracing for another political shift with the general election scheduled for July 4, 2024. Polls consistently predict a Labour Party victory under Keir Starmer. This anticipated change has already influenced policies that concern the wealthy. The Conservative government, in a bid to preempt Labour’s tax reforms, has announced the end of the UK’s non-dom tax regime from 2025. This regime allowed those with significant overseas wealth to avoid UK taxes on their foreign income, a major draw for HNWIs. The Labour Party’s commitment to abolishing private schools’ VAT exemption adds another layer of financial burden for wealthy families.
The UK’s situation contrasts sharply with other countries that are also experiencing high net outflows of millionaires, but for different reasons. China and India, for instance, are losing millionaires as their burgeoning economies create wealth at unprecedented rates. Many HNWIs from these countries seek better lifestyles, safer environments, and superior healthcare and education services abroad. Regional security threats and political uncertainties, such as the potential reelection of Donald Trump in the USA, also drive millionaire migration from countries like South Korea and Taiwan.
Interestingly, Russia has seen a deceleration in its millionaire exodus. Having lost nearly a quarter of its millionaires since 2013, the remaining wealthy individuals appear to be staying put, especially following Putin’s expected win in the March 2024 presidential elections, securing him an unprecedented fifth term.
Conversely, countries that have tailored their policies to attract wealthy investors are seeing significant gains. The UAE tops this list, benefiting from low crime rates and zero taxes on personal income, capital gains, and inheritance. Similarly, Australia and Canada continue to attract HNWIs due to their stable democracies and high living standards. The USA, despite its political unpredictability, remains a magnet for wealthy migrants, thanks to its thriving tech sector and appealing retirement environment. Within Europe, Italy and Greece are capitalizing on Portugal’s decision to end its golden visa program, drawing wealthy individuals who previously considered Portugal.
The trend of Britain’s wealthiest leaving the country is more than a response to immediate political and economic conditions; it’s a vote of no confidence. This movement started well before the Conservative government’s recent policy shifts, including Chancellor Jeremy Hunt’s March announcement to abolish the 225-year-old non-dom regime. Hunt’s move, aimed at cutting National Insurance contributions for workers, was seen as a short-term political manoeuvre, but it signalled to the globally wealthy that the UK was no longer a safe haven for their assets.
Brexit’s long shadow has been a significant factor. Since the 2016 referendum, the UK has struggled to maintain its allure for global wealth. The British pound and the FTSE 100 index have both underperformed, reflecting broader economic malaise. Over the past decade, the number of millionaires in the UK has declined by 8%, while countries like Germany, France, Australia, Canada, and the USA have seen significant increases in their HNWI populations.
Despite the UK’s enduring advantages—such as the English language, robust legal framework, and strategic time zone—the combination of political instability and unfavourable policy changes has created a hostile environment for the wealthy. As a private client tax lawyer noted at the recent Spear’s 500 Live conference, Britain appears to be “closed for business” for the internationally wealthy.
The future under a potential Labour government looks challenging for retaining or attracting HNWIs. Labour’s plans to close a £30 billion spending gap will likely require increased tax revenues. Although the party has ruled out a wealth tax, its focus on worker rights suggests higher costs for businesses, which could impact shareholder profits. The imposition of VAT on private school fees and higher stamp duty for overseas property buyers further underscore a direction that may deter global HNWIs.
In contrast, countries like Italy, Singapore, and the UAE are drawing UK’s wealth with favourable tax regimes and stable economic policies. Italy’s flat fee tax on overseas income, Singapore’s robust economic environment, and the UAE’s zero-tax policies are highly attractive to the globally mobile wealthy.
While national policy shouldn’t be dictated solely by the interests of the super-rich, the departure of these individuals sends a clear message. It indicates a broader lack of confidence in the UK’s economic and political future, a signal that policymakers must heed. The upcoming election will be crucial in shaping the country’s trajectory, but reversing this trend will require more than just political change; it will necessitate a reevaluation of the UK’s overall appeal to the world’s wealthiest.
Please accept our use of essential cookies.