Despite the government’s lofty pledges to be the “start-up hub of the world,” confidence has fallen so low that only 17 per cent of owners would advise a young entrepreneur to start their business in the UK today, says Matthew Elliott
When entering government, Sir Keir Starmer stated that wealth creation would be his “number one priority”. Launching the government’s industrial strategy, the Prime Minister doubled down, pledging to “make Britain the best place to do business”.
Rachel Reeves echoed this sentiment in her Budget last year, declaring: “Growth begins with the spark of an entrepreneur… our job is to make Britain the best place in the world to start up, to scale up, and to stay.”
These are noble goals. Yet, as we move into 2026, a chasm is widening between these aspirations and the grim reality facing the nation’s wealth creators. The latest data suggests that for those actually running businesses, these words ring hollow.
A landmark survey of 1,150 family businesses and farmers conducted for the Jobs Foundation by Whitestone Insight has revealed a historic wave of pessimism. A staggering 78 per cent of family business owners are now pessimistic about the UK economy.
A full 80 per cent of business leaders feel the government fundamentally fails to understand the reality of running a business. Trust in the Prime Minister’s central mission of growth has evaporated, with only 18 per cent of owners agreeing that it remains his priority. 64 per cent of business owners report they have been actively harmed by recent Budgets, while a mere three per cent see any benefit.
Perhaps most damningly, entrepreneurs are five times more likely to say that the 1970s – a decade synonymous with industrial strife, double-digit inflation and the three-day week – offered a better tax and regulatory climate than the 2020s. In fact, only one per cent of respondents selected the present decade as the best time to do business. Unsurprisingly, the best decade was seen to be the 1980s.
This is not just a minor dip in confidence. It is a profound indictment of an economic and political environment seemingly actively hostile to enterprise.
However, the one finding that should keep any Chancellor awake at night, is the collapse of the UK’s reputation as a beacon of entrepreneurship. Despite the government’s lofty pledges to be the “start-up hub of the world,” confidence has fallen so low that only 17 per cent of owners would advise a young entrepreneur to start their business in the UK today.
When the job creators of today are telling the next generation to build their businesses overseas, the government’s economic mission is clearly failing.
Why would anyone start a family business if they can’t leave it to their children and have it carry on with the same ethos it started with?
It’s unsurprising that this is the case when you examine how the government is currently treating business owners. Despite a partial U-turn on Christmas Eve, the government is still set to raid Business Property Relief (BPR) – an exemption to Inheritance Tax – meaning that the family businesses that employ the most people will be subject to crippling penalties if they want to pass on their business to their children when they retire.
Why would anyone commit decades of their life to building a business in the UK if they cannot pass it on without facing penalties that could force the sale or breakup of the company? The data bears this out, with two-thirds (63 per cent) of owners finding it “demoralising” to know they can no longer pass on their life’s work intact.
The polling shows that the 74 per cent of farmers and 44 per cent of family businesses that are aware of the upcoming changes have already been forced to change their future plans due to the threat of these tax liabilities. As Sir James Dyson recently observed, why would anyone start a family business if they can’t leave it to their children and have it carry on with the same ethos it started with?
We already know the answers
The Chancellor currently has a consultation open looking at how the government can reform taxation to support entrepreneurship. Well, we know the answer already, and we don’t need more rounds of evidence to understand that the current path is unsustainable.
To truly make the UK a global start-up hub, we need a radical policy shift that respects the role of family enterprise and ditches the misguided reforms to BPR entirely – and Agricultural Property Relief. We cannot expect to build a “high growth” economy while simultaneously penalising the very people who take massive personal risk to create jobs.
When asked what would actually help, the message from the front lines was clear: the government must prioritise reducing business energy costs (47 per cent), reversing the increase in Employer National Insurance Contributions (38 per cent), and making it easier to pass on a business to the next generation without a tax penalty (32 per cent).
If we want a country where enterprise builds social mobility, we must stop penalising those who seek to build a legacy. Without these changes, making the UK the “start-up capital” of the world will remain a hollow phrase, and the UK will continue its slide into an era that business leaders already consider worse than the dark days of the 1970s.
The time for rhetoric has passed; the time to properly back entrepreneurship is now.
Matthew Elliott is President of the Jobs Foundation and a member of the House of Lords