One in five of Britain’s fastest growing start-ups could relocate abroad within the next three years unless the Government intensifies its efforts to create a more favourable environment for business growth, according to new research by Virgin Media O2. The report highlights a growing concern among entrepreneurs about regulatory hurdles, political uncertainty, funding challenges, infrastructure deficits, and talent shortages, all of which threaten the UK’s status as a global hub for innovation.
Virgin Media O2’s 'Growth Signals' report, based on a survey of over 2,000 high-growth firms, including those in cutting-edge sectors like artificial intelligence and quantum technology, reveals that while 85 percent of start-ups want to remain in Britain, a significant portion sees the US, Singapore, and specific European locales as more attractive destinations for scaling their businesses. The looming risk of a "start-up exodus" echoes wider economic shifts, following a £100 billion capital outflow from London’s markets last year and 88 companies delisting from the London Stock Exchange in 2024 to pursue growth overseas.
Lutz Schüler, Virgin Media O2’s chief executive, emphasised the unique potential of the UK to nurture ambitious, home-grown talent but warned that too many firms cannot envision a pathway to scale domestically. He noted the necessity of decisive government action to avoid decline and position Britain as a leader in the AI-driven economic revolution. Among the report’s key recommendations are agile regulatory frameworks, enhanced capital incentives, the development of future-proof digital networks, AI-ready talent, and long-term policy certainty to build confidence within the entrepreneurial community.
This urgency emerges amid a backdrop of economic strain for British businesses. Recent changes, such as hikes in employer national insurance contributions and wage pressures, have added to operational costs, drawing criticism from business groups like the Confederation of British Industry. They have urged the government to reconsider further tax increases, warning they could stall Chancellor Rachel Reeves' ambitions for economic growth.
Despite the challenges, there remains a notable undercurrent of optimism. Nearly half of the companies surveyed praised the UK’s high-quality research institutions, sound international business environment, and robust legal and regulatory systems as strengths that could underpin long-term economic prosperity if properly supported.
Virgin Media O2 itself is navigating a difficult market environment. Reports indicate the operator lost 118,400 mobile contract customers in the second quarter of 2024, attributed in part to a slowdown in innovation within high-end smartphones. Fixed-line customer numbers also fell by 13,600, although these declines were partially mitigated by the expansion of its fibre network, which now reaches five million premises. CEO Lutz Schüler has stressed ongoing investments in networks and services as essential to staying competitive in an evolving telecommunications landscape, particularly as rivals like BT’s Openreach have also experienced significant customer losses.
Taken together, these findings illustrate a critical juncture for the UK economy. While the country retains many fundamental assets conducive to innovation and growth, the concerns voiced by entrepreneurs and the pressures on key industries such as telecoms suggest that without clear, supportive policies and a stable business environment, Britain risks losing vital talent and enterprise to more attractive international markets.
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- [1] (Daily Mail) - Paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10
- [2] (Reuters) - Paragraphs 11, 12
- [3] (Reuters) - Paragraph 11
- [4] (Reuters) - Paragraph 11
Source: Noah Wire Services