Revealed: How business investment is rolling backwards under Rachel

Post-Brexit, business investment rose but investors seem less keen under Ms Reeves

Montage © Facts4EU.Org 2025

For a Chancellor whose priority is growth, she should be getting worried

One fundamental aspect of Rachel Reeves’s Budget yesterday was ‘public spending’ and the fact that it will not be cut, but increased. The Chancellor spent a lot of time talking about public investment. The money for this comes from the public and from business.

This report looks at UK business investment and growth, how it has performed this year, under Ms Reeves and the Labour Government. In our next report we will compare this to how it performed since Brexit.

Sir Keir Starmer and his party have made growth their No.1 mission

To quote from the party’s website:

“Securing economic growth to boost living standards is our core mission for government.”

Two excellent ways of achieving growth are innovation and investment, leading to higher productivity, which in turn leads to economic growth. Leaving the EU has already opened up a greater possibility of more innovation, as the UK is no longer restricted by the EU’s ‘precautionary’ approach to anything new. Whilst there is still a long way to go to change the culture of Whitehall in this respect, the benefits are beginning to be seen.

That leaves investment – and especially business investment

In her Budget statement Rachel Reeves started well on this subject:

“Private investment is the lifeblood of economic growth…”

30 seconds later, however, she said this:

“So my choice is not cuts, not stagnation, but to maintain the additional £120 billion of [public] investment…”

Apart from quoting a few examples of some individual companies, a great deal of Ms Reeves's speech was devoted to public, rather than private, investment.

Business investment under Sir Keir Starmer and Rachel Reeves

Business investment depends on many things, but a stable tax and regulatory environment and a general feeling of optimism about the economy loom large. There must also be a tax regime which rewards those who risk their money.

If business investors and entrepreneurs become dis-incentivised, then serious problems start to arise. Unfortunately, Labour’s policies and new legislation have not helped.

The falling rate of increase in business investment this year, by quarter in real terms, under Labour

As the chart shows, this year the very healthy growth in business investment has fallen every quarter to the point where in the latest quarter (Jul-Sep) it barely grew at all.

It is worth remembering what Rachel Reeves said in her Budget Statement on Wednesday:

“And in last year's budget, I raised taxes on business and the wealthiest to close the £22 billion black hole in the public finances…”

The effect of "raising taxes on business and the wealthiest" in Labour's first Budget in October last year has been in direct contrast to the Government's avowed stance to put economic growth first. It has not, however, been unexpected.

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If all the wealthy leave, who is left to do the investing and create jobs?

It has been reported that there has been a steady flight of non-doms and millionaires from the country. These are precisely the people who form the 1% of the population who pay around 30% of the total tax burden.

Not only do the comparatively rich pay a heavily disproportionate amount of tax, these are the people who are most likely to be those who invest in businesses. If these people leave for what they consider to be fairer tax regimes, not only does the Government's tax intake fall, but investment starts to reduce. Many might well say that Sir Keir Starmer's words, over and over, about Britain being a country under Labour which encourages growth, have begun to have a hollow ring about them. Below is one example from the Prime Minister in early December last year.

No.10 Downing St, filmed in the Middle East, Dec 2024

The question of whether there has been a flight of high net worth individuals from the country has been hotly contested by several organisations.These reports have been prepared annually for the past 10 years by a wealth management firm, using data from another company. The organisations making counter claims appear to be of a certain persuasion and much revolves around the term 'millionaire exodus' that has been used. This is a term that has been used by the media, but in fact the reports refer to 'high net worth individuals'.

A large number of people owning houses, particularly in the South-East, are technically now millionaires by virtue of the value of the property they own, but in terms of their liquid worth they are not. What matters is whether individuals who have sufficient funds readily translatable into cash which they could invest into companies are leaving the country, or considering this. Members of the Facts4EU team certainly know people who are actively making plans to leave, as they believe that more, punitive taxes are on their way.

It is hard to argue that, with talk of wealth taxes, an atmosphere has been growing suggesting that those who do well will be heavily penalised going forward.

What happens to the government’s income tax revenue if the Top 1% leave?

We have analysed one element of the government’s total tax revenue each year: that of income tax. It should be noted that none of the other parts of taxation are included in what follows, such as Capital Gains Tax, VAT, etc. These calculations relate purely to the total income tax take and use data from His Majesty’s Revenue and Customs published in June this year.

The chart shows that losing the Top 1% of earners would result in a drop in the total income tax take of more than a quarter. Incredibly the Top 10% of us are responsible for nearly 60%, and 50% of us produce an astonishing 90% of the total.

In income tax terms, half of us are more or less paying the income tax for the rest.

What would we do without the high earners?

The question is always at what point tax rates become so high on the highest achievers that they decide to go and make their fortune elsewhere.

So, did business investment suffer because of Brexit?

To complete the story of business investment it is important to see it in the light of what was happening before Labour took power. The impression has been given by the Prime Minister - and most certainly by Rachel Reeves in recent weeks - that Labour inherited a position of flatlining business investment, and that this was somehow down to Brexit.

In the series of five ‘Pre-Budget Specials’ we produced in association with GB News, working with the Rt Hon Sir John Redwood, CIBUK.Org and Stand for Our Sovereignty, we published many ‘at-a-glance’ charts proving that the Chancellor could not blame Brexit for her tax rises.

In our next report will put the record straight, using the latest official figures from the Office for National Statistics.

The Rt Hon Sir John Redwood commenting exclusively on this report to Brexit Facts4EU

“It is alarming that Rachel Reeves' tax increases, added to Ed Miliband's bans and net zero extremism, are reducing the growth in business investment they inherited.
“Driving wealthy and talented people out of the country loses us investment as well as losing tax revenue. Big long term government projects like HS 2 and nuclear power stations cannot make up for all these losses. Too much tax and regulation undermines Brexit freedoms and will drag us down to EU levels of low growth and even to GDP per head only half that of the US like the EU today.”
- The Rt Hon Sir John Redwood, 28 Nov 2025

Observations

The first observation we would make is that three quarters' worth of figures do not represent a firm downward trend. Nevertheless, the fall in the growth of UK business investment is concerning. Real growth comes from business, not public investment. Public investment is another way of saying government spending.

One of the problems for the government is that the 'mood music' coming out has not been attractive to businesses. With the increase in the minimum wage and the attempt to make all employees, even on their first day, have the same rights as workers who have been with the company for years has not appealed to business bosses.

In the next article we will complete the picture by looking at what has happened to business investment over the past nine years since the Referendum, as well as since the UK finally left the EU. This will undoubtedly surprise many readers.

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[ Sources: Office for National Statistics | HMRC ] Politicians and journalists can contact us for details, as ever.

Brexit Facts4EU.Org, Fri 28 Nov 2025

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Reader Comments 14

11. NH , Friday, November 28, 2025, 19:13:

7. Sceptic
You have no idea what you are talking about !
The UK has a trade deficit with the EU but a surplus with the rest of the world. Presently the resulting total trade deficit is only 1% of GDP which is very little. We presently have higher debt repayments because we have more index linked and short term debt. All this means is we have to adjust to present market conditions before other countries. For most countries they will face large rises in debt costs over the next few years.
.
As you have said foreign investors purchase UK assets. So the money is flowing into the UK. They invest in the UK because it's an attractive market, the same reason they invest huge amounts in the USA . Our Q2 2025 BOP was only -1.1% so it's not a problem.
.
The UK Government can borrow for as little as 0.15% via inflation linked bonds. If the Labour wants lower borrowing costs they only need to reduce inflation to the level they inherited. Our debt contracts where taken out while we were in the EU and they would be exactly the same today if we were still in the EU.

12. Mr Sceptic , Friday, November 28, 2025, 20:26:

The UK has a trade deficit AND a primary investment income deficit.

13. Gazzablack , Saturday, November 29, 2025, 00:40:

When you see Rosedene farm eggs in Tescos, or Woodside farm chicken, you probably think it comes from a British farm.
Wrong
Those farms are completely fake, invented for marketing purposes and consumer manipulation.
.
Tescos alone operates 7 fake farm brands, and they're extracting £600 million from British shoppers who think they are
Supporting real farmers.
.
There is a Woodside farm that has been operating ethically for 20 years, rearing free range pigs, then Tesco decided they wanted the farm's name.
Not the farm's pork, or it's partnership, just the name.
They launched a new pork brand called Woodside farm to replace their budget range, wrapped it in pastoral imagery with rolling hills and Red tractors and started selling pork from the Netherlands, Denmark and intensive UK operations.
.
Woodside farm's reputation was damaged by this, but the farm's owner didn't have the financial clout to fight Tescos in court.
(They did the same with Boswell farm's as well).
.
It's not just Tescos,
Aldi operates Ashfield farm, for chicken, beef, pork and lamb, all featuring Union Jack branding
But this Ashfield farm is fake.
.
60% of shoppers actively look for the Union Jack to support British farmers, but what most don't realise is that current labelling regulations create a massive loophole, products can legally display the Union Jack even if entirely imported, as long as country of origin appears somewhere on the packaging in small print, and the product was packed or processed in the UK.
Packed in the UK can mean it's 100% foreign with a British flag on front.

14. Gazzablack , Saturday, November 29, 2025, 01:10:

Additional to my post @13
.
Here's a recent example showing how this works
.
Polish egg imports to the UK increased 2000% in just 2 years.
This surge happened during the UK eggs crisis when British farmers were threatening to quit production over supermarket prices which Made operations unviable.
Instead of paying British farmers fairly, supermarkets turned to Poland.
Most of those Polish eggs came from caged systems that are largely banned in the UK.
And then during a major Salmonella outbreak, traced directly to imported Polish eggs, Polish authorities found Salmonella at several sites supplying eggs to the UK.
But the imports kept flowing because they were cheaper than paying British producers a fair price.
.
The pattern repeats with chicken
Thailand exports approx. 200,000 tons of cooked chicken to the EU annually. The UK imports around 1,200 tons of processed product
Thai poultry costs 40% less than British chicken.
Thailand has no animal welfare laws equivalent to UK standards.
The chicken is often water injected, to bulk up weight.
Tesco, Asda, Ireland and Birds Eye all use This chicken in ready meals, wraps, sandwiches and frozen products.
It's disclosed in small print, if you know where to look.
But on the front of the pack?
British looking branding, and British prices
And the supermarkets pocket the entire 40% margin difference.

14 comments, page 2 of 2

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