Young professionals are leaving the UK in favor of sunnier climes and more favorable tax regimes in southern Europe, according to Vlad Yatsenko, billionaire co-founder and chief technology officer of digital banking giant Revolut.
This trend, he warns, poses a significant challenge to Britain’s position as a global talent hub, particularly in the competitive fintech sector.
Yatsenko, who co-founded Revolut in 2015 alongside CEO Nik Storonsky, pointed out that a growing number of the company’s employees are taking advantage of remote working opportunities to move abroad. “Now the UK is competing with southern Europe,” he said. “Before, young people who wanted a career went to London. But nowadays people are moving (to southern Europe) because they are attracted by better financial rewards, tax incentives and lifestyle.”
Countries like Portugal (pictured) and Italy have introduced attractive tax breaks aimed at under-35s to attract foreign talent and retain their own younger workforces. Lisbon, in particular, has become a booming hub for start-ups, while Italy is seeing a surge in startup technology funding, reaching $2bn (£1.8bn) up to now this year. Dealroom data indicates that Italy is on track to have its second best funding year since 2021, bucking the trend of declining investment in other countries.
Yatsenko, a Ukrainian-born entrepreneur who moved to London after working in Germany and Poland, stressed that the British government needed to take proactive steps to retain talent. “The government must do better,” he insisted, stressing that rival countries “create environments to attract talent.”
Despite his concerns, Yatsenko acknowledged that the UK remains a competitive place to launch a fintech business. Revolut, headquartered in Canary Wharf, employs more than 10,000 people globally and allows its staff to work entirely remotely or on a hybrid basis. The company’s flexible working model has made it easier for employees to consider relocating without sacrificing their careers.
The exodus of young talent is not just a Revolut problem but a wider challenge facing the UK’s technology and financial sectors. Startup founders have expressed concerns about policy changes, such as increased capital gains tax announced in the October budget, could discourage entrepreneurship and accelerate the talent drain.
Revolut’s growth trajectory has been impressive. Over the summer, the company was granted a banking license in the UK, paving the way to expand its range of regulated products, including plans to offer fully digital mortgages. THE financial technology The company also launched a secondary sale of shares, valuing the company at $45 billion. Yatsenko owns about 3% of the company, giving him a paper fortune exceeding $6 billion, according to data provider Beauhurst.
The company’s success takes place in a context of rigorous performance monitoring. Yatsenko noted that Revolut maintains its hybrid working model by closely monitoring staff performance. Underperformers have a difficult choice: quit immediately or improve within six weeks. This approach contrasts with other companies where executives have pushed to end working from home due to productivity concerns.
“I read it because managers don’t know what their team members are doing. Our approach is different,” Yatsenko explained. “Because there’s this transparency that way we can be distributed.”
Revolut’s stance on remote working reflects a broader shift in workplace culture accelerated by the pandemic. However, it also highlights the challenges businesses face in retaining talent as employees have greater flexibility to choose where they live and work.
The UK has traditionally attracted international talent, particularly in sectors like finance and technology. London, in particular, is considered a global hub offering unprecedented career opportunities. Yet as remote working becomes more accepted and other countries offer competitive incentives, the UK’s position is being tested.
Tax incentives in countries like Portugal and Italy make them attractive destinations. The Portuguese Non-Habitual Resident (NHR) regime provides substantial tax benefits to new residents for a period of up to ten years. Italy has implemented similar programs, offering tax breaks to attract foreign professionals and returning Italian nationals.
These incentives, combined with a great lifestyle and lower cost of living, prove hard to resist for many young professionals. The Mediterranean climate, rich culture and relaxed pace of life offer an attractive alternative to the often stressful and expensive environment of the UK.
Yatsenko’s comments serve as a wake-up call for policymakers. To maintain its status as a major hub for talent and innovation, the UK may need to reconsider its tax policy and invest in creating an environment that remains attractive to a younger workforce.
The recent government tax decisions have raised eyebrows in the start-up community. Increases in capital gains tax could discourage investment and entrepreneurship, potentially pushing innovators to more favorable jurisdictions. The concern is that, without competitive incentives, the UK could see a decline in new businesses and a subsequent impact on the economy.
Revolut itself continues to thrive, reaching 50 million customers worldwide and boasting over 10 million users in the UK alone. The company’s plans to introduce fully digital mortgages demonstrate its intention to further disrupt the traditional banking industry. By initially launching these products in Lithuania, Ireland and France, Revolut aims to bring them to the UK market, potentially offering consumers more streamlined and accessible financial services.
As the fintech landscape evolves, companies like Revolut are at the forefront of change. However, the ability to innovate and grow is closely linked to access to the best talent. If the UK fails to retain its brightest minds, it risks falling behind in the global technology race.
In conclusion, Vlad Yatsenko’s warning highlights a crucial issue facing the UK’s future as a center for innovation and enterprise. The lure of remote work combined with competitive overseas incentives is leading to an exodus of talent that could have long-term implications. It is imperative that the UK government and businesses address these challenges to ensure the country remains an attractive destination for the next generation of entrepreneurs and professionals.
Paul Jones
Harvard alumnus and former New York Times reporter. Editor of Business Matters for over 15 years, the UK’s largest business magazine. I also lead the automotive division of Capital Business Media and work for clients including Red Bull Racing, Honda, Aston Martin and Infiniti.