There were questions in the House, and it became a burning political and economic issue. Britain had lost an empire and appeared to be losing home-grown talent, too. The “brain drain” of scientists and engineers, particularly to America, was a hot topic in the 1960s.
There was also a sports drain, with even top British footballers such as Jimmy Greaves and Denis Law being lured away to high-wage Italy — though they did not stay long, the great Welsh footballer John Charles being an exception with a more enduring career at Juventus. These days, the flow is mostly in the other direction, to England’s Premier League.
That brain drain came and went, though many of those who left for America in the 1960s had arrived in the UK only in the late 1940s and 1950s, in the aftermath of the Second World War, and were not home-grown talent.
Now the brain drain is back, alongside a wealth drain, and it is usually the main topic raised when I talk to people in business. Every financial adviser has tales about wealthy clients relocating abroad, and everybody knows somebody who has decided to seek their fortune in, and take their entrepreneurial skills to, Dubai, Milan, Lisbon or other places.
Three things are happening. The first is the emigration of younger British people, fed up with this country and the student loan system, seeking better opportunities elsewhere. The second is that many wealthy Brits, often those who have sold their businesses, are moving abroad before the exchequer takes all the fruits of their endeavours.
The third is the exodus of former non-domiciles — people who lived in the UK but whose residence was elsewhere, so they paid tax only on UK income or capital gains.
What do the figures tell us? Official data showing that 252,000 British people emigrated in the year to last June attracted a lot of comment — mainly that people were fleeing Labour’s high taxes.
In fact, there was a slightly higher emigration figure, 257,000, for the previous 12 months, and emigration of British people has averaged just over 250,000 a year since 2020-21, when the Office for National Statistics applied new methodology.
What do we know about British people who emigrated in the latest year? Most, 91 per cent, were of working age (16-64), 8 per cent were children and only 1 per cent were in the 65-plus age group. There is ammunition there for those who think we are losing working-age talent.
While more than a quarter of a million British people emigrated, however, 143,000 came the other way. Again, most were of working age, 79 per cent, while 13 per cent were children and 8 per cent were 65-plus.
There are two possible explanations for this. One is that some of the emigration was of young people choosing to study abroad, who then were in the immigration figures when they returned after their courses. The other is that people did emigrate to work but some later returned, because it did not work out, or they were missing home.
That still leaves net outward migration by British people of 109,000 in the latest 12 months, with slightly more than that, 116,000, of working age. There was net immigration of children and the over-65s.
• UK net migration lower than thought as hundreds of thousands emigrate
Though we do not know the full details, there are echoes of the 1960s brain drain. Newly qualified doctors are choosing Australia because of a lack of opportunities here, and because they are treated better there. Some young people with ideas and ambition are deciding it is better to pursue them elsewhere.
What about the British wealthy moving abroad, which financial advisers say is happening at scale? Most, if the emigration figures are right, will still be of working age, but selling a business has allowed them either to retire early or invest, often in local firms, without running them.
Henley & Partners, which describes itself as a global leader in residence and citizenship planning, says there was an exodus of 16,500 millionaires from the UK last year — much more than any other country.
Henley has been criticised for politicising its data, which it denies, and 16,500 is only just over 0.5 per cent of the three million people in the UK who are millionaires, mostly by virtue of owning a property in affluent areas, notably in London and the southeast.
The UK began to experience a net outflow of millionaires after the Brexit referendum in 2016 and, according to Henley, it is losing people with considerable financial assets. The firm estimates that in last year’s exodus, individuals with a total of £66 billion of investable assets left the UK.
“Prior to 2016, the UK had traditionally always attracted more millionaires than it lost to migration,” it says in its 2025 Wealth Migration Report. “The UK’s wealth outflow — or ‘Wexit’ — has been years in the making, but two pivotal policy shifts accelerated the trend.
“The closure of the Tier 1 (Investor) visa in February 2022 eliminated a key entry route for affluent foreign nationals. Then, in March 2024, the Conservative government’s overhaul of the non-domicile tax regime, followed by Labour’s announcement of changes to inheritance tax rules in October, triggered a sharp escalation.”
One of the points highlighted in Henley’s report — Labour’s change in inheritance tax that applied it to the worldwide assets of non-doms — could have been designed to trigger an outflow of the wealthy. The idea that the steel billionaire Lakshmi Mittal would have been prepared to accept 40 per cent inheritance tax on all his assets was for the birds. He has left for Dubai and Switzerland.
Getting to the bottom of what is happening now that the non-dom regime has been abolished is not easy. Non-doms, together with those who had been “deemed domicile” — people who after earlier reforms had indicated that they were domiciled in the UK for tax purposes — paid a combined £12 billion in income tax, capital gains tax and national insurance in 2023-24, the latest year for which figures are available.
The Office for Budget Responsibility (OBR) estimated that 1,200 of the UK’s 73,700 non-doms would leave the country as a result of the abolition of this status — a figure challenged by the consultancy Chamberlain Walker, which said in October last year that 1,800 had already gone.
The OBR, however, stuck to its original analysis in its latest forecast, published alongside the November 26 budget. It also said there would be a sharp rise in self-assessment income tax receipts in 2026-27, “driven by the reforms to the non-domicile tax regime”. Those figures, too, have been challenged.
It may take years before the full story of the abolition of the non-dom regime is known. In the meantime, we have the reality that working-age Britons are leaving these shores to seek their fortunes elsewhere, and high-net-worth individuals are also doing so, taking large amounts of wealth with them. There is no exit tax in the UK, unlike in many other countries, though the wealthy fear it.
Whichever way you look at it, there is a brain drain and a wealth drain. And that cannot be good news.
PS
There was a big response to my column last week on artificial intelligence and whether we need, or could afford, a universal basic income (UBI). The response included quite a lot of misconceptions, so this will be a subject I return to.
But for now, I should say something about the clutch of figures we had on “super Thursday” last week, including the latest statistics for gross domestic product (GDP).
The headline was that GDP rose by a “disappointing” 0.1 per cent in the final quarter of last year, slightly below expectations. Those expectations, however, shifted around a lot in recent weeks. After weak monthly figures for October, economists feared that GDP would show a fall in the fourth quarter, sparking recession fears.
That changed with an unexpectedly strong monthly figure for November, which turned out to be a bit too strong and was revised lower on Thursday, trimming quarterly growth back to 0.1 per cent from the expected 0.2 per cent.
The big picture for 2025 was that the economy grew by 1.3 per cent, better than the 1.1 per cent consensus in January, but in the end also a touch disappointing. GDP per capita rose by 1 per cent after zero growth in 2024, and grew by more last year than over the previous five years combined.
That said, growth in GDP and GDP per capita tailed off during the year, as it did during 2024, as a result of the uncertainty and reality of Rachel Reeves’s two budgets.
Very weak figures for construction — the poorest quarter for four years — chimed with what people in the industry were telling me. A 2.7 per cent drop in business investment in the final quarter of the year was also concerning.