At the end of this month (October 30), the Labour government will reveal its economic plan during the Autumn Budget presented to Parliament. The Chancellor of the Exchequer, Rachel Reeves, who has been in charge since this past July, will share how Labour will address the £22 billion shortfall while encouraging economic growth. While pointing a finger of blame at the previous Tory government, the deficit is expected to be covered largely by an increase in taxes.
In an August speech, PM Keir Starmer declared that the forthcoming budget would be “painful,” adding that “those with the broadest shoulders should bear the heavier burden.” While perhaps popular with the electorate, the rhetoric is rather vague.
Recently, CI connected with the CEO and founder of Curve, Shachar Bialick. Curve is a Fintech that offers a digital wallet App designed to help you manage your various cards while striving to reduce fees and provide certain bank-like features. Curve is regulated by the UK Financial Conduct Authority and in the EU by the Bank of Lithuania under e-money rules.
Many predict that capital gains taxes will be at the top of the list for an increase. We asked Bialick how this will impact the UK innovation ecosystem.
“An increase in Capital Gains Tax (CGT) could harm the UK’s innovation ecosystem by making it more difficult for startups to compete with tech giants like Google or Apple, which pay higher salaries and their RSUs are liquid. Startups often compensate for lower salaries by offering tax-efficient options, but a CGT hike would make illiquid startup options less attractive to top talent,” explained Bialick. “As a result, the best talent will gravitate towards larger companies that offer higher salaries, liquid RSUs, and more security, leaving startups struggling to attract and retain the skilled workforce they need to bring innovation to the market. This shift would force smaller companies to either raise their costs unsustainably or find a country which favours entrepreneurship, further widening the gap between emerging firms and tech giants, and ultimately stifling the tech and innovation sector in the UK.”
What about other taxes? Could the UK incorporate a different strategy and become more of a tax haven to compete more effectively with EU countries? Bialick said that while tax policies like CGT and income tax influence a location’s competitiveness, they are just one aspect of what makes a city like London a thriving tech hub.
“London’s success stems from being a global melting pot, attracting talent from all over the world, combined with its long-standing leadership in pivotal sectors like finance and regulation. Moreover, government services such as the NHS support a relatively higher income tax rate, whereas CGT is more about generating value to the ecosystem as a whole (more jobs, more GDP, more innovation, etc). Therefore, I see a difference between how the government should think about income tax vs. CGT. Low CGT, especially in the context of entrepreneurship (vs. e.g. capital markets) incentivises an ecosystem that fosters innovation and entrepreneurship. Maintaining an environment that encourages global talent, offers regulatory expertise, and supports innovation is crucial for the success of the UK as a nation.”
Some Fintech Insiders are concerned about the critical Fintech ecosystem in the UK, including a lack of government support, talent shortfalls, and more. At the same time, the Fintech industry is vital to sustaining the UK as a top Financial hub. Should the UK government be doing more?
Bialick said a proactive approach to ensuring the Fintech ecosystem remains robust is essential to sustaining the UK’s Status as a global financial hub, but this is insufficient.
“I would not focus predominantly on the Fintech sector but rather the startup sector as a whole. The government should take steps to create healthy breeding grounds for startups through Taxation, Subsidies, and Competition Laws/Regulations. Historically, the UK has done all of the above (see EMI, Open Banking, PSR activities around IFR, and more). However, in the past few years we have seen a deterioration of the good work the government and Treasury did in the first two decades of 2000.”
Bialick added that government support for the Fintech sector should incorporate the creation of an innovative and flexible regulatory framework. This framework should enable Fintech firms to scale and compete globally while fostering a level playing field.
“Regulators should actively utilise their authority and proactively address anti-competitive behaviours. A notable example of regulatory shortcomings is the differing approaches between the UK and Europe regarding Apple’s restrictive practices on competing wallets,” Bialick stated. “Over the past three years, Europe has taken a strong stance against Apple’s anti-competitive actions, resulting in the European market allowing competing wallets on Apple devices for free since early 2024. In contrast, the UK’s PSR and CMA failed to take decisive action, leading Apple to permit competing wallets in the UK only for a commercial fee. Introducing such a fee effectively restricts access and by definition competition, highlighting the regulators’ failure to address the issue promptly and decisively.”
We asked Bialick about a specific issue in the UK. The goal is to improve the listing environment for firms to go public. Too frequently, firms will choose another market, like the US, to trade their shares. One noted Fintech, Revolut – a regulated digital bank, is reportedly considering a listing in the US over the UK – its home base. So, are policymakers doing enough to encourage private UK firms to trade on UK exchanges? Bialick said that while public officials have made strides to improve the listing environment, these individuals have not addressed the needs of high-growth companies.
“The US continues to offer deeper capital markets, larger velocity, higher valuations, and a regulatory environment that is more attractive to tech companies seeking to go public. The UK needs to do more to level the playing field, such as streamlining the listing process, reducing regulatory burdens, and ensuring that the equity markets remain competitive by convincing pension funds et al. to take ‘more risks’ by investing in young public tech companies,” said Bialick. “Additionally, the UK should provide more incentives for companies to list domestically, like offering enhanced investor protections, liquidity, marketing, and access to global investors. Policymakers must focus on fostering an ecosystem where high-growth tech firms feel confident that the UK can support their long-term growth ambitions. While there has been progress, more tangible reforms are needed to make London the first-choice listing destination for fintech and tech companies.”
Asked about his company’s performance and whether Curve is considering listing its shares, Bialick said Curve is focused on its mission to empower its customers to have financial freedom through pricing, selection, and convenience.
“We’re proud of the growth, innovation, and success we’ve achieved so far. As for future plans, including any potential moves toward becoming a publicly traded firm, we’re always evaluating the best strategies to continue delivering value to our customers, partners, and shareholders,” shared Bialick. “However, our current focus remains on building a world-class product and driving long-term growth.”