High-tax Britain is losing the race for global talent

High taxes, fiscal constraints, and the rising cost of living imply that London is no longer the top pick for skilled workers; instead, places such as the Basque Country are starting to see positive outcomes, according to reports. Ivan Jimenez

I proudly hail from the Basque Country in northern Spain, yet due to my extensive time in the UK, I also see myself as quite the Anglophile.

So I empathize with the 2 million Brits who have been pushed into higher tax brackets due to years of progression. fiscal drag policies , as a new report According to insights from financial experts at Rift, it was revealed that the typical high-income individual can expect 21 percent of their overall earnings to be subjected to the higher tax bracket come 2025. This percentage has been steadily increasing ever since the implementation of the freeze.

Many observers overseas believe that the UK is increasingly being seen as having a high-tax economic environment. In general, taxes relative to the UK’s gross domestic product (GDP) are projected to increase from 35.3 percent this year to a record-high 37.7 percent in 2027/28. according to the Office for Budget Responsibility (OBR) . It means London and other leading UK cities will no longer be a destination of choice not only for inward investment and leading international companies, but also for skilled employees across the globe. At a time when three quarters of UK firms are reporting skills shortages , that will do nothing for UK growth and competitiveness.

This implies opportunities for the UK's rivals.

The top professions are in the Basque Country.

For instance, in the Basque Country, the UK was once known as the top destination for securing excellent career prospects. However, when the 2008 financial crisis struck, this area suffered disproportionately compared to others. Consequently, numerous highly skilled professionals moved to the UK due to the superior job offerings along with comparatively lower tax rates.

But now the roles are reversing. While in 2019 around 4,000 Basques lived in the UK, last year only 79 migrated from the region to Britain. That same year, 93 Britons decided to make the leap to the Basque Country.

Biscay provides a 30 percent tax break for individuals who secure employment in technology, science, finance, commerce, or management sectors, as well as for those starting a new business.

Why? In the Basque region’s Biscay (Bizkaia) province, the provincial government recognised that attracting and retaining high quality talent was critical to fostering growth. A few years ago, the government introduced a 30 per cent tax reduction to those relocating to Biscay and securing a job in technology, science, finance, commercial or management, or launching a start-up. This is no short-term gimmick either: the tax break runs for 11 years and applies to anyone who has worked outside Spain for five years. There’s also a 20 per cent tax-free allowance for spending associated with the costs of moving to and living in the Basque region, so fees such as private school costs can also be declared in tax returns.

A worker earning £67,907 in Britain – the equivalent of €80,000 – would take home £49,947 after paying income taxes. In the Basque Country, they would earn £56,209 after tax under the 30 per cent rule.

The Biscay government also established Bizkaia Talent, a public-private organisation to act as talent recruitment agency, with the aim of attracting highly qualified people from across the world. To date, since the tax incentives were introduced and the global talent attraction programme established, more than 500 people have relocated to the province.

As an ardent admirer of the UK, I am concerned about the impact that a high-tax environment might have on its global position. The country ought to be recognized as a hub for generating jobs and consequently fostering prosperity; however, increases in National Insurance contributions and fiscal drag may not contribute positively towards this objective. If Chancellor Rachel Reeves seeks inspiration, perhaps she should consider looking at what has been done in the Basque Country. In the meantime, some of Britain's finest talents may find themselves particularly welcomed in the region known as Biscay.

Ivan Jimenez serves as the director of Bizkaia Talent.