A New Destination for Top Talent: The Basque Country Rises as London's Competitor
High-tax Great Britain Struggling to Compete for International Skilled Workforce
As a proud Basque and avid Anglophile, I can't help but empathize with the roughly 2 million Brits being squeezed into higher tax brackets due to years of fiscal drag policies, as a new report from Rift reveals. These policies have led to an average high earner seeing 21% of their total income subject to the higher tax rate in 2025, a figure that has steadily increased since the freeze was implemented.
According to the Office for Budget Responsibility (OBR), tax as a share of UK GDP is forecast to rise from 35.3% this year to a record high of 37.7% in 2027/28. This means that London and other leading UK cities will no longer attract not only inward investment and global companies, but also skilled employees from around the world at a time when three-quarters of UK firms are reporting skills shortages. This won't bode well for growth and competitiveness.
The opportunities are, however, handful for the UK's competitors. Take the Basque Country, for example. In the past, the Basque region was known as the place to go for top career prospects, with many high-skilled employees relocating to the UK due to the quality of jobs and relatively low tax rates during the 2008 financial crisis.
But times are changing. While in 2019 approximately 4,000 Basques lived in the UK, last year, only 79 migrated from the region to Britain. In contrast, the same year, 93 Britons chose to settle in the Basque Country.
Why the shift? In Biscay, the provincial government recognized the importance of attracting and retaining high-quality talent to foster growth. A few years ago, the government introduced a 30% tax reduction to those relocating to Biscay and securing a job in technology, science, finance, commerce, or management, or launching a start-up. This incentive runs for 11 years and is applicable for anyone who has worked outside Spain for five years. Furthermore, there's a 20% tax-free allowance for moving and living expenses in the Basque region, covering costs like private school fees that can be declared in tax returns.
A worker earning £67,907 in Britain (around €80,000) would take home approximately £49,947 after income taxes. In the Basque Country, under the 30% rule, they would earn £56,209 after tax.
To top it off, the Biscay government established Bizkaia Talent, a public-private organization acting as a talent recruitment agency, with the aim of attracting highly qualified people from across the globe. Since the tax incentives were introduced and the global talent attraction program was established, over 500 people have relocated to the province.
The high-tax economy in the UK risks damaging its international standing. Britain should be known for job creation and wealth creation, not burdensome taxes. Perhaps Chancellor Rachel Reeves could take a page from Biscay's book if she wants to encourage job creation and wealth creation. Until then, the best of British talent will have a warm welcome in the Basque Country.
Ivan Jimenez, Director of Bizkaia Talent.
- The Basque Country, as a competitor to London, offers appealing tax incentives to attract top talent, such as a 30% tax reduction for those securing jobs in technology, finance, commerce, or management.
- Despite the UK's historical draw for high-skilled employees, the increasing taxes may drive skilled individuals away, resulting in a negative impact on growth and competitiveness.
- In the Basque Country, a worker earning around €80,000 would take home more after taxes compared to their counterpart in the UK.
- The Biscay government has established Bizkaia Talent, a recruitment agency, to attract highly skilled individuals from around the world to the province.
- In politics and general news, the debate on tax policies will continue to be significant as competition for talent intensifies across economies.
- The shift from the UK to the Basque Country suggests that ever-increasing taxes can have a profound effect on business and finance, potentially hindering wealth creation.
