The UK's standing as a prime destination for international investors and entrepreneurs has suffered a severe blow following Chancellor Rachel Reeves' Budget, according to a major international ranking.
UK Suffers Steepest G7 Fall in Passport Ranking
The latest annual Nomad Capitalist Passport Index has placed the United Kingdom in 35th position, a dramatic fall of 14 places from its 21st place ranking in 2024. This represents the largest decline of any nation within the G7 group of advanced economies.
The index, which assesses the attractiveness of a country's passport based on factors including taxation, perception, and ease of doing business, suggests policy changes in the Labour government's Budget have directly harmed Britain's global reputation. The UK has now been overtaken by several European counterparts, including Italy, Czech Republic, Greece, Hungary, Bulgaria, and Romania.
Tax Hikes and Non-Dom Abolition Blamed for Collapse
Analysts point to specific measures within the Chancellor's fiscal plans as key drivers behind the plummeting ranking. The abolition of the non-dom tax status and a series of significant tax increases have created new obstacles for employing talent and have altered how the UK is perceived by the world's wealthy and mobile business figures.
Khatia Gelbakhiani, chief growth officer at Nomad Capitalist, stated the drop was a direct result of government policy. "Britain's collapse down the index is not an accident," she said. She criticised the record £40bn tax rise in the 2024 Budget and a further £26bn increase announced last month, alongside taxes on property, dividends, and the so-called 'mansion tax'.
"Freezing income-tax thresholds, raising taxes on dividends and property income... sends a clear signal that success is something to be penalised rather than welcomed," Gelbakhiani added.
A Blow to Labour's Growth Mission and Brexit Worries
The findings deliver a stark challenge to the core election pledge made by Sir Keir Starmer and Rachel Reeves that securing economic growth would be the government's foremost mission. The data implies their taxation strategy is having the opposite effect on international competitiveness.
The results also fuel ongoing concerns about Brexit's damaging impact on Britain's appeal. Notably, the only EU nations now ranked below the UK are the Netherlands and Austria.
In response to mounting living cost pressures, the government has highlighted measures like abolishing the child benefit cap, freezing rail fares, and expanding childcare support. However, its attempt to find £5bn in welfare savings was abandoned after a backbench Labour rebellion before the summer recess.
The Treasury has been approached for comment on the index's findings.
