Wealthy Brits Exit UK for Europe Following Budget

Based on data collected by Henley & Partners, the UK’s wealth exodus is expected to include 85 centi-millionaires and 10 billionaires (US$).

Record surge in UK investment migration applications reflects growing concerns.

Henleys claim that Brits have risen from 20th place on its client source market list in 2018, to 4th place in terms of global demand for alternative residence and citizenship options for 2025.

Stuart Wakeling, head of Henley & Partners’ UK office points out,

“The UK’s high tax rates and concerns about additional tax hikes are highlighted as being among the main reasons for the wealth exodus.”

Stuart Wakeling

So what does this mean for Gibraltar's Property market?

Following a slow start to the year, we have seen an uptick in activity from the summer onwards.  With less money coming in from outside, seemingly everyone was relying on everyone else to be able to purchase and, with no money coming in from an external market, all the capital was held in property and the market ground to a halt.

We have seen an increase in Cat II applications at Richardsons over the past few months, possibly driven by the Labour government’s tax forecasts, but also due to more local political factors such as the EU’s imminent EES system which should make entry into the EU via our own frontier much more certain for UK nationals.  The decision will be an automatic one based on electronic ‘stamps’ rather than the will of a border guard.

We expect this trend to continue throughout 2025, with increased numbers of Cat II applications bolstering the upper end of the market place, while the trickle down effect of funds coming into the market place will allow families to help their adult children onto the ladder, bolstering the Local Market properties and the lower end Open Market too.

The increased numbers of arrivals into Gibraltar looking to rent in the short term, could also see rents rise further (we have seen approximately 10% rent increases through 2024) meaning the buy to let sector could be stirred into action at both ends of the value ladder.

In addition, the additional squeezes on private landlords in the UK are causing many to exit the market altogether.  These liquidised assets need to be reinvested somewhere and Gibraltar property currently offers some very attractive annual returns compared to many UK cities.

So how many of the 6,500 HNWIs leaving the UK for the rest of Europe will make it to our great territory?  It’s hard to say, but with a population of 39,000 (UN estimate 2024) it wouldn’t take many of them to arrive to boost our economy and give a firm push to our property market.

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Disclaimer:

It should be noted that despite their importance, taxes are by no means the only driver of the ongoing exodus of millionaires out of the UK. Other economic and finance-related reasons include:

• The impact of Brexit on financial markets and general business opportunities in the UK.
• Failure to recover from the 2008 financial crisis. Britain has been one of the worst-performing economies in the world since the crisis, when measured in USD terms, with total private wealth held in the country down by -10% since its 2007 pre-crisis peak (in USD). The UK’s GDP per capita (in USD) is also down -3% over this period, which compares very poorly to the US (+70%) and the world (+52%) – see link. It is worth noting that back in 2007, the UK had a higher GDP per capita than the US but now it ranks well behind.
• The UK’s main equity index (the FTSE 100) has also performed poorly since the 2008 financial crisis and is down by -23% since 2007, when measured in USD terms. This compares very poorly to positive growth of +228% in the S&P 500 and +101% in the MSCI World Index over the same period.
• The growing dominance of the US and Asia in the global hi-tech space has caused several wealthy tech entrepreneurs in the UK to reconsider their base location, with many moving to tech hubs in North America and Europe. Brexit has arguably exacerbated this trend.
• The dwindling importance of the London Stock Exchange (LSE). The LSE was once the world’s largest stock market by market cap but now ranks 11^th globally. Its performance over the past two decades has been particularly poor, with a large number of delistings and relatively few new IPOs. The FTSE 100 has also performed poorly, as mentioned earlier.

Wealth versus GDP:

We consider wealth to be a far better measure of the financial health of an economy than GDP. The reasons for this include:

• In many countries, a large portion of GDP flows to government and therefore has little to no impact on private wealth creation.
• GDP counts items multiple times. For instance, if someone is paid USD 100 for a product or a service and they then pay someone else that same USD 100 for another product or service, USD 200 will be added to the country’s GDP despite the fact that only USD 100 was produced at the start.
• GDP largely overlooks the impact of property and stock market moves, yet these two factors clearly have a significant impact on wealth creation.
• GDP is a relatively static measure that tends to move only slightly year on year. It also has a time lag.

Wealth figures, on the other hand, have none of these limitations, making them a far more accurate gauge of the true financial health of an economy than its GDP figures.