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The UK faces an increase in young adults leaving the country owing to low salaries, the rising tax burden and a lack of affordable housing, wealth managers have warned.
Camilla Stowell, chief executive of wealth at Rathbones, said: “More UK individuals and families are thinking of leaving and we can see that with the next generation, we’re seeing a trickle of the . . . younger generation going to other geographies in order to find better opportunities.”
She added that the rising interest among people in their 20s had been sparked by the “less than optimistic tone” about the UK’s economic growth prospects, as well as the job opportunities and earnings power overseas, noting that the younger generation are also more “mobile”.
Stowell said some of the destinations people were moving to included Dubai, the US and Ireland, which Rathbones said offered low or favourable tax treatment and are considered good places to build businesses and careers.
Her comments come after City bosses warned the UK minimum wage was putting pressure on starting salaries for graduates at professional services firms, raising concerns about the impact on hiring for law, finance and accountancy roles.
In this month’s Budget, Rachel Reeves, the chancellor, is expected to announce a 4 per cent increase in the minimum wage to £12.70 an hour, boosting the average salary for a 40-hour week from £25,376 to £26,416. The lowest graduate salary in professional services and finance is £25,726.
“A quiet exodus is under way,” said David Little, financial planning partner at UK wealth manager Evelyn Partners. “Increasingly, young professionals and graduates in the UK are packing their bags, not for a gap year or a sabbatical, but for a permanent move abroad.
“I’ve seen a noticeable rise in clients sharing that their children are choosing to emigrate in pursuit of a better life abroad. What’s particularly striking is that, rather than trying to dissuade them, many parents are actively encouraging the move.”
According to a recent poll by the Adam Smith Institute, a think-tank, one in four Britons aged between 18 and 30 said they could leave the UK, with many pointing to the lack of affordable housing and financial strains.
Another report by the British Council found nearly three-quarters of younger people would consider living and working in another country in the short or long term.
Little said there was “a growing sense of disillusionment with the current state of the UK”, and it was “hard to ignore the mounting pressures, rising taxes, increasing unemployment and growing concerns about crime”.
“With the tax burden now at its highest level in over 70 years, I find it harder than ever to argue against their decision to seek opportunity elsewhere,” he said.
Both Little and Stowell said that Dubai is increasingly attractive.
“Dubai has transformed into a global career hub, attracting thousands of British workers with its tax-free salaries, lack of crime, booming job market and high quality of life,” Little added.
He pointed to recent data that showed relocation enquiries from UK professionals to the UAE have surged by over 400 per cent in five years.
UK professionals earning £90,000-£120,000 a year may lose up to 45 per cent to income tax and national insurance — even higher in Scotland. However, in Dubai, that same salary is tax-free, often supplemented with housing allowances, private medical insurance and school fees, Little said.
“Many young Britons feel the UK no longer offers the opportunities or lifestyle they aspire to . . . surveys show around 40 per cent of under-35s are planning to emigrate within five years. That’s a frightening statistic.”
Families and older generations are also considering whether to leave the UK following last year’s Budget, when the government expanded the inheritance tax regime to include unused pension pots from next April and some farmland.
“It’s accelerated since the last Budget,” Stowell said. “The tax changes . . . have a knock-on effect in terms of optimism in the UK, job opportunities, earnings power . . . and tax thresholds, they’ve been frozen for so long.”
