The recent high-profile moves by Arm and WE Soda, two Britain native success stories, to set up shop in the United States over London has called into question the UK’s role as a vibrant entrepreneurial ecosystem. The UK was formerly the home of thriving start-ups and developing unicorns.
Similar to this, Revolut and others have lately alleged claimed the government of the United Kingdom is doing nothing to promote expanding tech enterprises due to a concoction of high taxes, cumbersome regulations, and a lack of skilled labor.
Since SMEs still make up 99% of all businesses in the UK, entrepreneurs are the driving force behind the country’s economic expansion. However, criticism indicates that the UK has produced an environment that doesn’t accommodate people prepared to take the risk and start their own firm, rather than supporting this entrepreneurial spirit.
The UK must establish an atmosphere that honors entrepreneurs with laws in place that position them for financial success, whether they are starting a firm off the kitchen table or setting out to build the next Tesla. The UK economy as a whole benefits when entrepreneurs are successful.
Recent government statistics show that the total amount of small enterprises in the United Kingdom has decreased, from a total of 5.9 million in 2020 to a total of 5.5 million in 2023. This decline in the total number of small enterprises is hardly shocking given that the UK economy was recently described as “listless” after experiencing little expansion over the past four years.
According to the data, the UK may be the most difficult country in which to launch a business. The UK does not support entrepreneurship enough in comparison to nations like the US. The UK must adopt a new mindset because motivating entrepreneurs calls for a culture transformation in which people are enthusiastic about business expansion, success, and the risks and benefits it entails.
Companies come in various sizes and shapes, from the the plumber who hires all three trainees to the hairdressing who works in people’s homes to the local private law firm that handles conveyancing and will writing with 20 associates to those who found challenger banks, fintech start-ups, or medical device businesses.
To encourage and applaud those who are prepared to take this risk, a mentality shift is needed. Whatever the result, don’t let it make you envy. The least impoverished nations are those with the highest billionaires per capita ratios. Instead of being envious of these success tales, we ought to salute the attitude.
Punitive government measures that make it even harder for business owners to succeed are another disappointment for those who bravely chose to launch their ventures. Despite what we may hear, I have yet to find proof that government policy is in favor of business. Rising taxes discourage business owners and reduce the quantity of funding available.
There is now no incentive financially for entrepreneurs to start a firm in the UK because it has one of the highest rates of taxation in Europe. Considering both the commercial and personal risks that entrepreneurs take to succeed, tax advantages are vital to encourage them. In my experience, businesses can grow and attain their full potential more when there are fewer taxes. The government has to understand that having fewer, larger pieces of the pie is preferable to having more, smaller pieces. The government must adopt a broader approach to tax letting up capital in order to jump-start the nation’s economy and make it less hostile for business owners.
The recent Mansion House Pension Reforms by Jeremy Hunt, which will increase the amount of UK retirement savings deposited in private capital, contribute in part to increasing the amount of investment money that can be directed into UK enterprises. However, this has no impact on foreign direct investment.
High taxes, as we are currently seeing, encourage blatantly inappropriate behavior and discourage entrepreneurs from taking more considered chances on innovative new company initiatives. Less taxation of business owners and investors encourages development by making it simpler for investors to realize disproportionate returns from other areas. No talent is lacking in the UK, but there aren’t enough finances to go around, especially for bigger, later-stage venture capital investments or AIM/FTSE listings.
Regardless of your position on the Brexit argument, here is now a fantastic commercial opportunity to establish a setting where the UK is the new hybrid of Swiss and Singapore in order to render the UK a more alluring location to conduct business. The government could promote the UK for its business-friendly tax system with the financial strength and clout to spur inward investment by leveraging London’s status as a powerful and reliable financial center. This is the imaginative move required to give businesses of all sizes better access to capital and skills, and contribute to making the UK a more desirable place to conduct business.
The precise opposite is taking place right now. For instance, since June 2021, funding of organizations that invested in UK companies has been withdrawn in the amount of £9 billion. Investors dislike making investments in UK-based enterprises. The opportunities, talent, and inventiveness are all still present. It is the government’s inability to take action to foster an environment that promotes success and returns. Investors are aware of this and won’t invest.
The UK has a great chance of regaining its status as a major hub for entrepreneurship. However, the United Kingdom needs to reconsider how it handles and supports corporate success if it wants to make sure that these initiatives succeed to the fullest extent possible. Reduced regulation and a more comprehensive approach to tax reform are required to increase investment and foster economic growth.
In order to prepare entrepreneurs for their achievement, whatever it may be, we also need to foster entrepreneurial talent by supporting a growth mindset. the tall poppies syndrome must end. Celebrate excellence and, more crucially, promote a readiness to take chances and submit to the whims of the market in order to earn a living or generate rewards.