A recent report highlights the challenges the UK faces in supporting and retaining high-value entrepreneurs and the innovative firms they aim to grow.
A declaration by the London-based Entrepreneurs Network states that up to 21% of UK entrepreneurs plan to leave the UK because the Labour government fails to understand the dynamics of an innovation-driven economy.
Apparently, jurisdictions like Dubai, the US, and Singapore are more appealing. Each of these locations has supported policies that encourage capital formation and support business, including lower taxes.
The Entrepreneurs Survey states:
“..Founders almost universally agree that the current government does not understand the needs of entrepreneurs.”
And;
“Negative views of the current levels of taxation and regulation in the UK are widespread among founders.”
Concerns are prevalent about the difficulty in raising growth capital and the inability to hire talent to support a new firm.
While it may be easy to launch a startup, scaling the business is a different question, which is more challenging.
Only 22% believe the UK does a good job of incentivizing new business creation.
On a positive note, tax exemptions such as SEIS, EIS, and VCT are viewed favorably, yet more needs to be done by the government.
Leo Labeis, CEO and founder of REGnosys, says the gloomy report reflects a broader issue of lack of confidence by founders, as policy uncertainty is affecting sentiment.
“Recent industry data continues to position London as one of Europe’s leading start-up ecosystems, underpinned by its depth of capital, talent and financial infrastructure, particularly in fintech and high-growth sectors such as Regtech. Maintaining that position will depend on greater clarity and consistency in policy, alongside stronger support for founders seeking growth funding and looking to scale in the UK.”
He believes that if the right policy is put in place, the UK can retain its competitive edge
Meanwhile, the survey shows that as faith in Labour has declined, support for the Tories is on the rise.
Philip Salter, Founder of The Entrepreneurs Network, is quoted in Sifted as explaining that the current climate is making it harder to invest, hire, and innovate. This has long-term ramifications for the UK economy.
“Politicians across all political parties need to double down on their efforts to rebuild trust by focusing on the practical barriers entrepreneurs face day in and day out,” stated Salter.
An innovation-driven economy should be a policy goal of all politicians. Risk takers and entrepreneurs drive economic growth and wealth for all. Myopic policies that undermine new business creation, including high taxes and excessive regulations that act as a hidden tax on capital formation, harm the entire population of any country.
