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Another Brexit in UK with departure of Billionaires

Billionaires exiting UK

Britain’s Billionaire’s Exodus:
Why the UK is Losing its Wealthiest Residents

Introduction

A silent but powerful shift is taking place in the United Kingdom: an exodus of billionaires, millionaires, and high-net-worth individuals (HNWIs) who have long made London their home.

UK’s billionaire exodus is heating up like a tax-season curry 🌶️. The main driver? Sweeping tax reforms—including the end of the “non-dom” status, higher capital gains and inheritance taxes, and VAT on private school fees. Wealthy individuals feel squeezed by rising tax burdens and diminishing returns on public services. Add concerns over safety, Brexit fallout, and a sluggish economy, and the UK’s appeal dims fast. Many are relocating to tax-friendly havens like the UAE, Monaco, and Switzerland. It’s not just about money—it’s about lifestyle, stability, and perceived value. The spice is too strong, and the billionaires are bolting.

The Policy Trigger: End of the Non-Dom Regime

In March 2024, Chancellor Jeremy Hunt, and later Labour Chancellor Rachel Reeves, abolished the long-standing non-dom tax regime. This regime had allowed UK residents who claimed non-dom status to avoid paying UK taxes on foreign income, capital gains, and offshore trusts.

Effective July 2025, any resident living in the UK for more than four years will be subject to full UK taxation on their global income, capital gains, and inheritance. This includes a 45% top income tax rate, up to 24% on capital gains, and a 40% inheritance tax on worldwide assets.

Who Is Leaving?

The list of departures reads like a who’s who of global business:

  • John Fredriksen, the Norwegian shipping tycoon, moved his business empire from London to the UAE, criticizing Britain for its deteriorating business environment.
  • Lakshmi Mittal, steel magnate and long-time UK resident, is reportedly weighing a shift to Switzerland, Italy, or the UAE.
  • Iwan and Manuela Wirth, founders of Hauser & Wirth, relocated to Switzerland.
  • Richard Gnodde, vice-chairman of Goldman Sachs International, left for Milan.
  • Filippo Gori, JPMorgan’s European head, relocated to New York.

The Numbers: Just How Big Is This?

  • According to the Henley & Partners Private Wealth Migration Report, 10,800 millionaires left the UK in 2024, a 157% increase over 2023.
  • The UK is projected to lose 16,500 millionaires in 2025, more than any country globally, even China.
  • These individuals reportedly hold over £66 billion in investable assets.

Taxation: The Smoking Gun

A landmark study by economists Arun Advani, David Burgherr, and Andy Summers (2025) quantified the effect of the tax policy shift:

  • A 19% drop in the net-of-tax rate caused a 6% emigration surge among the UK’s wealthiest residents.
  • The estimated elasticity (~0.26) means a 1% increase in effective tax burden leads to a 0.26% increase in emigration.
  • The primary driver was the inclusion of global income and assets in the UK tax net, especially inheritance tax on overseas estates.

Push and Pull Factors

  • Push: Higher taxes, fear of future fiscal crackdowns, and the political tone toward wealth.
  • Pull: Favorable tax regimes in the UAE (0% income tax), Italy (flat €100,000 tax on foreign income), Switzerland (lump sum taxation), and Portugal or Greece (golden visas, low inheritance taxes).

Economic Consequences

  • Oxford Economics warns the exodus could result in a net revenue loss of £1 billion annually, due to reduced consumption, investment, and property activity.
  • VAT, stamp duty, and even philanthropic donations are likely to decline.
  • Critics warn that the UK is risking its status as a wealth magnet.

Political and Public Perception

  • While some polls show 81% of millionaires support fair wealth taxation, the ultra-wealthy feel targeted.
  • Labour and Treasury are reportedly reconsidering the inheritance tax portion of the non-dom overhaul to prevent further damage.

Skepticism: Is the Panic Overblown?

  • Watchdogs like Tax Justice Network argue that the millionaire exodus is overstated: 0.2% to 0.6% of millionaires is not mass migration.
  • However, even this small number represents outsized losses in tax, capital, and influence.

Conclusion: A Fork in the Road

The UK faces a paradox: how to tax the ultra-rich fairly while still retaining their investment, influence, and entrepreneurship. If left unaddressed, the flight of capital and talent could signal more than just a fiscal miscalculation—it could mark the decline of London as the financial capital of Europe. Whether the government retools its policies or doubles down on fairness will determine whether this is a temporary reshuffle or a long-term shift in global wealth geography.

 

References

also see: Henley & Partners, Arun Advani (LSE), FT.com, The Times, WSJ, Economic Times, Tax Justice Network

Posted on by Sandeep

SEBI Curbing Stock Exchange “injection spike” fraud.

Making money from injection spike in Stock Exchange.

Injection spike on expiry day in stock exchanges has been a matter of concern. The recent interim order by the Securities and Exchange Board of India (SEBI) against Jane Street Group has sent ripples through the Indian financial markets, exposing a sophisticated alleged manipulation strategy that reportedly exploited the nuances of F&O expiry days. This case sheds light on the inherent vulnerabilities of derivative markets to well-orchestrated schemes and underscores SEBI’s firm resolve to safeguard market integrity.

The Expiry Day “Injection Spike” Trade by Jane Street

SEBI’s detailed interim order outlines how Jane Street, a prominent US-based global proprietary trading firm, allegedly engaged in “extended marking the close” and “intra-day index manipulation” strategies. The core of their alleged modus operandi revolved around influencing the closing prices of benchmark indices like Nifty and Bank Nifty on their respective expiry days to profit from pre-positioned, significantly larger index options contracts.

The “injection spike” refers to the sudden and artificial price movements observed, particularly in the last hour or minutes of trading on expiry days. Jane Street’s alleged strategy involved:

Aggressive Intervention in Underlying Assets:

On identified expiry days, Jane Street entities reportedly made large, directional trades in the constituent stocks of the Nifty and Bank Nifty indices, as well as in index futures. For instance, on January 17, 2024, a Bank Nifty expiry day, they allegedly made net purchases worth ₹4,370 crore in Bank Nifty constituents (cash and futures), simultaneously building massive short positions in Bank Nifty options (7.3 times the size of their long cash/futures positions).

Creating Artificial Price Pressure:

By either aggressively buying to push prices up or aggressively selling to drive them down, Jane Street allegedly created artificial demand or supply. This sudden influx of orders, especially in periods of reduced liquidity near expiry, could cause a sharp “spike” or “dip” in the index’s value.

Exploiting Options Leverage:

The critical element was the immense leverage provided by options contracts. Even a marginal, engineered movement in the underlying index’s closing price could cause their vast options positions to expire significantly “in-the-money,” leading to colossal profits. SEBI noted that while Jane Street might incur losses in the underlying cash or futures segments during these manipulative trades, the profits reaped from the options segment were disproportionately larger, making the overall scheme highly lucrative. The firm allegedly garnered over ₹43,289 crore in profits from index options on NSE between January 2023 and March 2025 across all product categories and segments.

Misleading Other Traders:

Such engineered price movements could mislead other market participants, especially retail derivatives traders, into believing genuine market sentiment, leading them to take positions based on these false signals.

SEBI identified 18 such trading sessions (15 for Bank Nifty and 3 for Nifty) where Jane Street’s “sharp, large, and aggressive interventions” allegedly distorted market prices and undermined integrity. Notably, SEBI also pointed out that despite being explicitly advised by NSE in February 2025 to cease trading patterns suggesting manipulation, Jane Street allegedly resorted to similar practices again in May 2025, demonstrating a “clear disregard/defiance” of the advisory.

Consequences as per SEBI’s Interim Order

In response to these grave allegations, SEBI has taken stringent action through an interim order, signaling its commitment to clamping down on market manipulation, irrespective of the size or global standing of the entity involved. The key consequences for Jane Street Group are:

1. Market Ban:

SEBI has barred Jane Street and four of its affiliated entities (JSI Investments Pvt Ltd, JSI2 Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd) from accessing the Indian securities market. This means they are prohibited from buying, selling, or dealing in any securities, directly or indirectly, until further notice. This is a comprehensive prohibition.

2. Disgorgement of Unlawful Gains:

The regulator has directed Jane Street to disgorge alleged unlawful gains amounting to **₹4,843.57 crore** (approximately $570 million). This amount has been ordered to be deposited into an escrow account with a scheduled commercial bank in India. Banks, custodians, and depositories have been instructed to ensure no debits are made from Jane Street’s accounts without SEBI’s permission.

3. Winding Down Existing Positions:

While a blanket ban is in place, Jane Street has been granted a window of three months from the date of the order, or until the expiry of such contracts, whichever is earlier, to close out or square off any open positions in exchange-traded derivative contracts.

4. Cease and Desist Order:

The entities have been directed to cease and desist from directly or indirectly engaging in any fraudulent, manipulative, or unfair trade practice or undertaking any activity that may be in breach of norms.

5. Continued Investigation and Opportunity for Hearing:

The interim order signifies the preliminary findings of SEBI’s investigation. Jane Street has been given 21 days to submit objections and may request a personal hearing. The regulator will continue its probe, and a final order may entail further penalties or actions.

This decisive action by SEBI against a global trading giant like Jane Street underscores the regulator’s enhanced surveillance capabilities and its unwavering stance against any practice that compromises market fairness. While the firm has stated its intent to dispute SEBI’s findings, the interim order serves as a powerful deterrent, sending a clear message that India’s derivatives market, despite its high liquidity and volumes, is not a playground for manipulative strategies designed to create “injection spikes” for illicit gains. The focus on protecting retail investors from such sophisticated schemes remains paramount for the stability and credibility of the Indian financial ecosystem.

Posted on by Sandeep · 1 Comment

Understanding the Current State of the USA Economy: Challenges and Solutions

Understanding the Current State of the USA Economy: Challenges and Solutions

Financial Challenges Facing the U.S. Economy in 2025

Introduction

The United States economy in 2025 is navigating a turbulent landscape marked by a soaring national debt, persistent inflation, decelerating growth, and fiscal strains at both federal and state levels. These challenges, exacerbated by policy uncertainties such as expiring tax provisions and trade disruptions, threaten long-term economic stability. Drawing on recent economic data, this article explores the key financial hurdles and proposes specific, actionable solutions to address them, emphasizing the need for decisive policy reforms to ensure resilience.

The Escalating National Debt Crisis

The U.S. national debt has surged past $36 trillion as of June 2025, comprising public debt (Treasury securities held by individuals, corporations, and foreign entities) and intragovernmental debt (owed to federal trust funds like Social Security and Medicare). Interest payments on this debt exceeded $1 trillion in the last fiscal year, a figure projected to rise in 2025 due to higher interest rates and growing debt levels. According to the Congressional Budget Office (CBO), interest costs could consume nearly 20% of federal revenues by 2030 if current trends persist, crowding out funding for critical programs like infrastructure, education, and defense.

The federal budget deficit, which reached $1.4 trillion in the first eight months of fiscal year 2025, is on track to hit $1.9 trillion for the full year. This persistent shortfall reflects a structural imbalance between spending and revenues, driven partly by entitlement programs and discretionary spending. The reinstatement of the debt ceiling at $36.1 trillion on January 2, 2025, has forced the Treasury to rely on “extraordinary measures” to avoid default, but these are stopgap solutions. A failure to raise or reform the debt ceiling could trigger a catastrophic default, undermining global confidence in U.S. financial markets.

Key fiscal deadlines loom, including the expiration of the 2017 Tax Cuts and Jobs Act (TCJA) provisions and enhanced Obamacare subsidies at the end of 2025. These expirations could reduce federal revenues by an estimated $400 billion annually (per CBO projections) if not extended, or increase deficits if extended without offsets. To address this, policymakers could:

  • Implement a Bipartisan Debt Commission: Establish a commission to propose a balanced mix of spending cuts and revenue increases, targeting a debt-to-GDP ratio reduction to 90% by 2035.
  • Reform Entitlements: Gradually adjust Social Security and Medicare eligibility ages and benefits structures to reflect longer life expectancies, saving an estimated $1.2 trillion over a decade (CBO).

Persistent Inflation and Monetary Policy Challenges

Inflation remains a stubborn challenge, with headline inflation at 2.4% and core inflation at 2.8% in May 2025, both exceeding the Federal Reserve’s 2% target. Core PCE inflation, a key Fed metric, is projected to rise to 3.6% by Q4 2025, driven by new tariffs—50% on Chinese imports and 20% on EU goods—that have increased input costs for manufacturers and retailers. These costs are often passed to consumers, eroding purchasing power. For example, the price of imported electronics has risen by 8% since tariff implementation, per the Bureau of Labor Statistics (BLS).

The labor market, while resilient at a 4.2% unemployment rate, shows signs of cooling, with monthly job gains slowing to under 150,000 in mid-2025 and projections of unemployment rising to 4.6–4.8% by year-end. Labor force participation remains below pre-pandemic levels, with 8 million job openings against 6.8 million unemployed workers, limiting the economy’s capacity to tame inflation without further tightening. The Federal Reserve’s high interest rates (currently at 4.75–5%) have curbed demand but risk tipping the economy into recession.

To address inflation, the Federal Reserve could:

  • Gradual Rate Cuts: Lower the federal funds rate by 25 basis points in Q4 2025, provided inflation trends toward 2%, to stimulate investment without reigniting price pressures.
  • Enhance Forward Guidance: Clearly communicate inflation targets and timelines to stabilize market expectations, reducing volatility.

Economic Growth Slowdown and Consumer Fatigue

Real GDP growth has faltered, contracting by 0.5% in Q1 2025 after a 2.4% increase in Q4 2024. Forecasts project growth of 1.1–1.5% by year-end, reflecting weakened consumer spending, which accounts for over two-thirds of GDP. Retail sales fell 0.9% in May 2025, and personal consumption expenditures dropped 0.1%, signaling a shift toward frugality amid rising costs and tariff-driven price hikes. For instance, grocery prices have risen 3.2% year-over-year, per BLS data, straining household budgets.

The labor market’s slowdown, coupled with policy uncertainty around tariffs and TCJA expirations, has dampened business confidence. Tariffs have disrupted supply chains, increasing costs for industries like automotive and technology by 10–15%, according to the National Association of Manufacturers. Housing affordability remains a constraint, with median home prices 40% above pre-pandemic levels, limiting construction and related economic activity.

To stimulate growth, policymakers could:

  • Extend TCJA Provisions Selectively: Maintain tax cuts for middle-income households and small businesses, costing $200 billion over a decade, to boost consumption and investment.
  • Invest in Infrastructure: Allocate $500 billion over five years for transportation, broadband, and clean energy projects, creating 2 million jobs by 2030 (per American Society of Civil Engineers estimates).

State-Level Fiscal Pressures

States face significant fiscal challenges as pandemic-era federal aid has largely expired and revenues stagnate. Budget gaps in states like California and New York exceed $20 billion each, driven by reliance on volatile income tax revenues and prior spending increases. Expected federal cuts, particularly to Medicaid (which accounts for 25% of state budgets on average), could deepen these gaps. For example, a 10% reduction in federal Medicaid funding could force states to cut services or raise taxes, further straining local economies.

States could:

  • Diversify Revenue Streams: Implement consumption-based taxes, such as expanded sales taxes on services, to reduce reliance on income taxes.
  • Regional Collaboration: Form interstate compacts to share costs for infrastructure and healthcare, mitigating the impact of federal cuts.

Overcoming Political Barriers

The proposed reforms face significant hurdles due to political polarization. Policymakers often prioritize short-term electoral gains over long-term economic stability, delaying action on debt, inflation, and growth. For instance, debates over TCJA extensions have stalled in Congress, with partisan disagreements over funding offsets. To break this gridlock:

  • Public Awareness Campaigns: Educate voters on the long-term costs of inaction, using platforms like X to amplify evidence-based policy discussions.
  • Bipartisan Task Forces: Create cross-party working groups to negotiate compromises on tax and spending reforms, building on successful models like the 2010 Simpson-Bowles Commission.

Conclusion

The U.S. economy in 2025 faces a daunting array of financial challenges: a $36 trillion national debt, inflation above target, a growth slowdown, and state-level fiscal strains. Policy uncertainties, including tariffs and expiring tax provisions, amplify these issues, while consumer fatigue and a cooling labor market dampen momentum. Specific reforms—such as a bipartisan debt commission, selective TCJA extensions, infrastructure investments, and labor market incentives—offer a path forward. However, success depends on overcoming political inertia to prioritize long-term stability. By implementing these targeted measures, the U.S. can navigate this turbulent period and build a foundation for sustained economic resilience.

See also: Similarities Between Pakistan and USA