RACHEL Reeves’ tidal wave of tax raids has pushed wealth and talent out of Britain, a top banking boss blasted today.
Goldman Sachs chief executive David Solomon warned the Chancellor that London‘s status as a finance capital is now “fragile”.
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The banking chief added that Ms Reeves will drain Britain of wealth creators unless she provides “incentives” to keep them in the country, where they can boost economic growth.
It comes amid fears Labour is plotting to impose more levy raids at the Autumn budget, after caving in to backbench demands to continue splurging on welfare.
Mr Solomon told Sky News: “Policy matters, incentives matter.
“I’m encouraged by some of what the current government is talking about in terms of supporting business and trying to support a more growth oriented agenda.
“But if you don’t set a policy that keeps talent here, that encourages capital formation here, I think over time you risk that.”
The top banker added that the City of London would “fray” without being treated more carefully by the Treasury.
At last year’s Budget the Chancellor hiked the lower rate of capital gains tax to 18 per cent, up from 10.
The higher rate was increased from 20 to 24 per cent.
But between January and July this year, the levy accrued just £11.8 billion, leaving government coffers worse off than the £13.5billion secured during the same period in 2024.
The receipts for 2024-25 were around £200million less than the government’s economic watchdog predicted.
Shaun Moore, tax and financial planning expert at investment firm Quilter, slammed the Chancellor’s tax raids for having “backfired”.
He said: “The government’s decision to slash capital gains tax allowances and hike rates has backfired.
“The policy may have been designed to raise revenue, but it’s instead prompted behavioural shifts that have dented the tax take.”
‘While taxing the wealthiest may sound politically appealing, the CGT experience shows that people will change behaviour or adjust their financial plans to mitigate the tax bills.”
Labour has wrecked the economy
By Ryan Sabey, Deputy Political Editor
IF Rachel Reeves was heading into Parliament’s summer break with a huge headache, things just got a whole lot worse.
The Chancellor woke up yesterday to a storm around Government borrowing hitting £20.7billion last month.
The figure — higher than the £17.1billion forecast for the period — was fuelled by a rise in the interest charges on government debt.
And now, instead of blue skies and sunshine over the summer, Ms Reeves will have to deal with dark clouds gathering over the Treasury.
She has said that “the world has changed” since her previous Budget, with Donald Trump’s global tariffs creating uncertainty.
But the harsh reality is that a series of decisions this Government made has wrecked what was always going to be a fragile recovery.
The decision to increase NI contributions for employers had a devastating impact on expansion and hiring plans — and wrecked confidence.
Anger was also levelled at her and Sir Keir Starmer for talking the country down when Labour first came to power, as they painted a gloomy economic outlook for Britain.
This is all before businesses face the roll-out of the workers’ rights package over the next two years, which will hit firms for £5billion, according to the Government’s own impact assessment.
And better prospects for working people appear doomed as wealth creators flee the country due to the high-tax environment, with around 16,500 expected to leave this year.
And this self-inflicted misery could be compounded further in the Budget this autumn as Ms Reeves tries to solve her spending shortfall.
The financial black hole has only been made worse by this month’s £5billion welfare reform U-turn and the £1.5billion she will now have to find after the partial retreat on Winter Fuel payments.
Economists have already said that the Chancellor may have to fund a £30billion shortfall to meet her fiscal rules, and higher taxes are a near-certainty because Whitehall departments have already faced brutal cuts.
Ms Reeves insisted yesterday that UK productivity was the problem. She said low investment levels compared to other G7 countries had led to UK output not keeping pace with our competitors.
Reeves said it would be easy to cut capital spending, but these would be “short-sighted, wrong decisions”.
