BREAKINGVIEWS-UK could lure US talent with a ‘non-Don’ regime

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By George Hay

LONDON, Feb 21 (Reuters Breakingviews) - Britain may have an opportunity to upgrade its departing “non-doms”. Last year Rachel Reeves, the country’s finance minister, ditched the “non-domicile” regime that had allowed cashed-up foreigners to live in the United Kingdom without paying tax on their foreign earnings. The move has upset wealthy expats, some of whom have moved elsewhere. Yet the upheavals wrought by U.S. President Donald Trump could prompt Reeves to create new measures that appeal to alienated American scientists, researchers, and technologists. Call it the “non-Don” regime.

Luring U.S. workers may look a challenge. The world’s largest economy could grow by 2.7% in 2025, the International Monetary Fund estimates, while the Bank of England recently halved its UK equivalent forecast to just 0.75%. British companies are increasingly opting to list their shares on U.S. exchanges.

Still, the Trump administration’s assault on domestic institutions may produce some émigrés. Elon Musk’s Department of Government Efficiency is trying to slash thousands of employees from the Centers for Disease Control and Prevention and the United States Agency for International Development. Trump wants to cut federal funding to universities, medical centres and other bodies, while new Health Secretary Robert Kennedy’s hostility to vaccines may chill pharmaceutical research. Meanwhile, big U.S. tech groups have publicly aligned themselves with the president, potentially alienating some talented employees.

Despite her aspirations for a “golden triangle” of scientific expertise between Oxford, Cambridge and London, Reeves cannot simply magic up a rival to Silicon Valley. The cash-strapped British government also lacks the fiscal firepower to match U.S. spending on research and development. But Britain does have the rule of law, world-class universities, and thriving cultural attractions. If Reeves makes it more attractive for Americans to relocate, a fair few might do so.

One change would be to make it easier for them to come to the UK. In the year ending March 2024, Britain granted over 185,000 visas to so-called “skilled workers”. But last April it raised the salary threshold required for that status from 26,200 pounds to 38,700 pounds. Some multinational companies have already rescinded job offers. Reeves, who has pledged to revisit the issue, could make it easier for U.S. experts to enter the country.

She admittedly has few tax levers to pull. American citizens are charged on their worldwide income. Relocating to Britain won’t change that, unless Trump honours his campaign promise to end extraterritorial taxation.

Successive British governments have battled to cut inward migration, which was a net 728,000 people in the year ending June 2024. That makes it harder to open the floodgates. And any overt attempts to lure American workers could prompt a backlash from Trump. Yet if a non-Don regime enticed talented innovators, it might help spur the growth Reeves desires.

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CONTEXT NEWS

The Trump administration can continue its mass firings of federal employees for now, a federal judge ruled on February 19, rejecting a bid by a group of labour unions to halt President Donald Trump’s dramatic downsizing of the roughly 2.3 million-strong federal workforce.

U.S. District Judge Christopher Cooper in Washington, D.C., said Trump’s onslaught of executive actions in his first month in office have caused “disruption and even chaos in widespread quarters of American society”, Reuters reported on February 20. But he said he likely lacks the power to decide whether the firing of tens of thousands of government workers is lawful.