UK Budget - who’s leaving London
Are there any major funds who are considering relocating from the UK to elsewhere in Europe, given what’s happening with UK politics (and the new socialist chancellor). With the carried interest raid, subtle increases in taxes for employers and employees, would it not be in everyone’s best interests to relocate to somewhere else in Europe with lower taxes?
Let’s first see what happens today. Senior deal makers (Senior Partners) have assessed the options for their personal tax situations in great detail and have actionable plans. It does however look like / the rumour is that Labour will keep any increases modest. If it’s 38-45% people will be gone, at 34-36% tops people will probably mostly stay (that’s about the edge). Sliding scales between.
Agree with the above. Let’s see what happens today. I think the needle mover will be the mid-level staff’s decisions over the next 2-3 years. Senior partners are wealthy as is. The problem is that London is firmly crossing the point where it no longer makes sense if you’re in PE in your late 20’s / early 30’s with a young family. The purchasing power and quality of life came down massively since 2019.
A lot of people are still trying to cope, but it’s starting to become undeniable as career progression or wealth creation in Europe become increasingly difficult.
The other elephant in the room is where do you go next?
The right move is Switzerland. France and Germany are going down the path of political chaos, and Italy and Spain are deeply unstable jurisdictions.
There's literally no economic activity in Switzerland, it's all old money families, private bankers and commodity traders but there's no organic wealth creation happening there and no non-finance economic activity.
This is WSO, where no one generates any real “economic activity” but everyone still thinks they’re super economically productive because they’re paycheck is big.
You do realise Switzerland has as many if not more companies than the UK in the top 50 and 100 largest by market cap in Europe, right? Roche, Nestle, Novartis, ABB… ?
Even if what you’re saying were true, what’s the UK’s other major industry apart from financial services? Commods (Shell, BP, Rio Tinto?)?
The key point about pan Euro PE is that you just need to be close to a major airport with good connectivity to the rest of Europe.
Unfortunately Switzerland doesn’t have the infrastructure in place to accommodate that shift (accommodation, transport, schools, etc.)
I thought this was a joke…
Strongly agree with you but only pushback is Italy being unstable - Meloni has exceeded expectations and is fairly competent whether you agree or disagree with her or not. You're right on France, Germany and Spain about to enter political shambles.
I hear you, but Italy’s track record over 50 years of democratic, republican rule does not point to stability.
Odds that policy making in Italy will shift overnight are always relatively high. Italy needs decades of stability before people will get comfortable. A US firm would never consider moving an office to Italy for tax reasons. You need a place with some long-term stability where you’re not likely to run into this rigmarole again: only CH can offer that in Europe.
Wrong comments on Switzerland, it has one of the best transport infrastructure in Europe, the public school system is also one of the best in world all the way to university (also in terms of ROI given grad salaries vs tuition fee), agreed in terms of housing it is a tight market but not as much as other European countries. There are a ton of "organic" industries beyond finance (which is also a real industry, by that measure the UK hasn't much else going for it as well): pharma, luxury, and tech (VC funding per capita is amongst highest in Europe). The only truly lacking part is a cosmopolitan culture and environment which is quite unique to the UK frankly, also it is a very conservative society (far right party is largest in the country). Immigration laws are also super though.
If my firm opens up a Milan office (100k flat tax to move there) or a Zurich office (30% tax or go live in Zug with 15% income / 0% capgains & carry tax) i’d move there in a heartbeat. Better quality of life, close to my interests. Anyway to look at is much better
Couple of my mid - senior team members are moving to Dubai. I will be left with a small team in London. I'd probably move to the US (but there are career reasons for that).
What kind of fund are you at?
32% on carry - looks like the lobbying was very effective
Or they just exaggerated things for a while to soften the blow
That’s for now, from April 2026 it seems almost certain to go higher. From the budget document:
32% tax on carried interest, lower than some feared
Germany is at 28.5%…
But then you have to live in Germany…
Will be taxed as income from 2026 onwards
This is just the start. They'll raise tax on carry, inheritance and capital gains tax again by or in 2026. Starmer and Reeves will have to give enough, 'red meat' to the far-left of the Labour party (the Corbynistas) to satisfy them. Additionally, the £20bn borrowing to 'invest' is being spent on day-to-day spending measures. We are in for the long haul
Of my colleagues who have left, they almost always come back to London.
London remains unmatched in being a place to raise children IMO. Best schools in the English speaking world, endless art/culture/attractions and the whole of Europe on your doorstep. And none of the toxic politics or toxic food that’s in the USA.
People constantly sh*t on the UK, but it really isn’t bad at all. You just generally miss the day-to-day sh*tshow also going on in European politics because of the language barrier.
If you talk to continental Europeans, they think it’s literally one of the worst places to raise children, especially if you consider the cost associated with it.
Can confirm - my friends and I are only here for a couple years, to better our CV / personal wealth / network (but also mainly for the tax relief expats get when they come back to motherland after 5 years)
It is actually one of the worst place for families in Europe...
Only here for the £££. If that’s gone I’m gone
>none of the toxic politics
. . .
Exits down, frequency and and absolute size of pre-tax carry pots down, post tax carry pots down even further
annualised expected carry over the next 5-10 years in Europe must be 30-40% of what mid-level PE professionals underwrote when they started their career
is PE still worth it ?!?!
Not in Europe lmao
Mid-cap fund currently in their Fund II investing phase moving to Italy in Q2'25. A couple of partners (one from European large cap fund, one from American large cap fund) moved to Italy / are in the process of moving to Italy. Two senior partners / executive (not investment team) of European large-cap fund moved to Milan.
As a continental European person, I would personally move immediately to Milan or Madrid if this was an option as they offer significantly higher / better quality of life, especially given the disproportionate improvement in your disposable income vs. cost of life in those countries.
Looking forward to chilling with all of you lads and lasses in Zurich or Milan, and reminisce about how great London was before it all went to shit
As an American, I just love watching the UK destroy itself. Pissing off the wealthy who are the last bastion of tax resources that dumb little island benefits from is a truly outstanding move.
true dat. Having lived in the US for 2+ years has been an eye opener for me
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