Reeves Under Fire as Directors Flee Britain and Small Firms Struggle With Soaring Costs

Britain is facing a two-speed business collapse as thousands of company directors move their operations abroad while small firms at home warn they are being crushed by soaring energy bills, rising taxes and an increasingly hostile economic climate.

With Chancellor Rachel Reeves preparing to deliver what critics have called a 'doomsday' Budget, pressure is mounting from entrepreneurs at every level who say the UK has become one of the least attractive places in Europe to build or expand a business.

Over 6,100 Directors Leave the UK as Tax Fears Mount

A new analysis published by The Telegraph reveals that 6,100 UK company directors changed their residency to a foreign country in the past 12 months, up from 4,300 the previous year.

The 42 percent spike, drawn from Companies House filings, shows a sharp acceleration in the number of business leaders fleeing Britain ahead of Reeves's Budget announcement.

The United Arab Emirates is the most popular destination, attracting 571 British directors in 2024 to 2025, followed by Spain and the United States.

Concerns Over Higher Taxes and Policy Chaos

According to The Telegraph, the exodus is being driven by changes introduced under Labour, including clamping down on non-doms, limiting inheritance tax reliefs for family businesses and raising capital gains tax. Rumours of an exit tax also contributed to anxiety among company owners.

Anna Leach, chief economist at the Institute of Directors, said that recent policy signals had intensified uncertainty. She told The Telegraph: 'Either way, it doesn't look like rational policy-making, and why would you want to stay in a country that doesn't make rational policy decisions?'

She added that there had 'been a sense of building crisis among certain parts of the business population, mostly at the smaller end'.

Small Firms Say They Are 'Treading Water'

While wealthier directors move abroad, small businesses rooted in Britain say they are being pushed to breaking point.

According to a BBC report, seafood supplier Venture Seafoods in Bridlington said rising energy costs are putting too much pressure on traders and households who 'cannot afford to pay any more'.

Director Gary Hodgson told the BBC: 'Most small businesses now are treading water, they haven't got any fiscal headroom.'

£33,000 Monthly Energy Bills Leave Firms With No Relief

Hodgson said increases in gas, water and electricity charges were overwhelming.

'Last month, our gas, water and electricity charges were over £33,000 ($41,900). Of that, £22,500 ($28,500) was electricity charges, and of that £1,100 ($1,395) was a climate change levy,' he said.

'We're not wasting energy, we can't afford the energy. That's just three overheads, on top of National Insurance increases, minimum wage increases, transport increases. All of our costs have increased, there's not a single cost on the balance sheet that hasn't increased.'

High Business Rates and NI Hikes Stall Growth Plans

In Lincoln, dress business owner Kirsty Gale told the BBC that current conditions make it nearly impossible to expand.

'The government needs to seriously consider the National Insurance. In April it went up from 13.8% to 15%. That is not encouraging me to take on full-time staff.'

She added: 'Rates, for new or existing businesses, are absolutely extortionate. We want to grow and move our premises into a much bigger one-stop shop, but those rates are currently too risky to take, even for a successful business like us.'

Chambers Warn of 'Continuing Uncertainty' Across the UK

The Hull and Humber Chamber of Commerce, in its Quarterly Economic Survey, reported 'continuing uncertainty, falling turnover and rising prices'.

David Hooper, its external affairs director, told the BBC: 'A lot of these businesses, following the National Insurance and minimum wage increases, are finding things increasingly difficult.'

He added that ahead of the Budget there was 'an awful lot of trepidation and concern'.

Hooper said: 'Don't put extra cost on business. They can't afford it, they don't need it. They need the Government to support them and encourage them to invest and drive the economy, not slow it down.'

Experts Warn the UK Is Becoming Inhospitable to Enterprise

Craig Beaumont of the Federation of Small Businesses told The Telegraph: 'If you are an entrepreneur, you are looking for opportunities, wanting to find where you can make a living.

'This is clearly a group who thinks they can make more money elsewhere. It is a very sobering thought.'

Treasury Defends Its Policies Despite Business Backlash

The Treasury told The Telegraph: 'If you make your home in Britain, then you should pay your taxes here too. That is why we abolished the non-dom tax status to invest in our public services, including the NHS.'

It added: 'Our main capital gains tax rate is lower than any other G7 European country and our new residence-based regime is simpler and more attractive than the previous one.'