An economic report reveals a rising number of British companies are considering moving their operations outside the United Kingdom due to weak domestic economic growth and concerns over tax increases.
According to the latest business survey by Santander Bank, nearly half of companies, or 47%, plan to expand internationally. This is a third higher than the rate recorded in last year's survey and more than double the 21% rate recorded in autumn 2023.
Santander points out that the growing desire to enter global markets is driven by fears of economic stagnation in the UK and potential future tax hikes. According to the latest official figures reported by British news agency PA Media, the UK's economic growth rate slowed to 0.1% in the third quarter of this year, down from 0.3% in the previous quarter.
Growth in the final quarter marked the weakest quarterly performance since the economy slipped into a mild recession at the end of 2023. UK Chancellor Rachel Reeves had been optimistic that stronger economic growth would boost tax revenues and support government spending plans.
Speculation has grown that Reeves will be forced to raise taxes as the autumn budget date on November 26 approaches. Polls suggest this is exacerbating uncertainty and affecting business and consumer spending.
This follows several major companies stating that the increase in their employee National Insurance contributions, announced in last year's budget, has added millions of pounds to their core costs.
Meanwhile, Head of Business Banking at Santander UK, Jean Galvin, stated that British companies are "determined to grow" but are "facing a difficult mix of geopolitical instability and weak domestic growth".
She added: "Concerns about domestic growth make overseas growth particularly attractive. With strong government policy and support for growth abroad, these companies can thrive and boost economic growth".
Santander conducts a biennial survey of around 1,000 companies with an annual turnover of at least £1 million ($1.3 million) to publish its semi-annual index.
The latest survey also found that 54% of the companies surveyed had either already moved their supply chains away from China or were seriously considering doing so. Santander noted that companies are taking steps to mitigate trade-related risks and diversify their supply chains to reduce reliance on China.
