A new study has warned chancellor Rachel Reeves is risking creating one of the world's most "anti-growth" tax systems, the Telegraph has reported.
Analysis by the US Tax Foundation and the UK’s Centre for Policy Studies (CPS) made the stark warning about the economy in the event Reeves increases capital gains tax.
The UK is already ranked 30th out of 38 OECD (Organisation for Economic Co-operation and Development) countries in terms of competitiveness following measures imposed by the last government.
And now, a possible capital gains tax raid could push the UK even lower in the rankings, according to the CPS, potentially only above France, Italy and Columbia.
CPS researcher Daniel Herring said: “There’s a real danger that Britain could end up with one of the least competitive and most anti-growth tax systems in the OECD if the expected tax rises come to fruition in the Budget.
“If Labour really wants long-term economic growth, it needs to get serious about fundamental tax reform. It’s not just about cutting taxes.
"The way we raise tax is damaging incentives, getting in the way of innovation, and undermining productivity.”
Jason Hollands, managing director of wealth advisors, Evelyn Partners, said business-owners were already consulting his company about moving abroad.
A Treasury spokesman said: “The chancellor has vowed to lead the most pro-growth government in Britain’s history, restoring economic stability and delivering more investment into the UK economy.
“The record-breaking £63billion of private investment secured at the International Investment Summit is a vote of confidence that shows the UK is one of the best places in the world to do business, building on reforms to our broken planning system and support for businesses through capping corporation tax at 25% and publishing a business tax roadmap to deliver the certainty they need to plan for the future.”