The UK’s financial landscape is at a crossroads. On one hand, we have a world-class fintech ecosystem, home to some of the most innovative startups and scaleups globally. On the other hand, we’re grappling with an increasingly challenging investment climate, rising national insurance contributions (dubbed a “jobs tax” by critics), a widening valuation gap between London and New York-listed companies, and murmurs that the UK is becoming un-investable. It’s a bold claim. But is it accurate?
As someone who works at the heart of early-stage fintech investment across Europe, I’ve seen how rapidly capital markets evolve. While there are genuine concerns about the UK’s competitive edge, the bigger question isn’t whether the UK is in decline. It’s whether we’re willing to adapt and seize new opportunities.
Why the valuation divide is a growing concern for UK startups
One of the starkest issues is the valuation gap between London and New York-listed companies. Over the past year, UK businesses have faced significantly lower valuations than their US counterparts. This discrepancy isn’t just about numbers, it’s about perception.
Investors are increasingly looking to the US, where deeper capital pools, stronger secondary markets and more aggressive growth strategies drive valuations higher. The result? A brain drain of promising UK startups choosing to list in the US instead of London.
Take the case of Arm Holdings, the Cambridge-based chip designer. Instead of returning to the London Stock Exchange, it opted for a Nasdaq listing despite its British roots. The move signalled what many feared; London is struggling to retain its most valuable, high-growth companies. This isn’t just bad news for the FTSE, it creates a ripple effect for early-stage startups. When late-stage exits look less attractive, it drains confidence from the entire investment cycle, making it harder for fintech founders to secure funding at earlier stages.
Is the UK’s talent conundrum a self-inflicted wound?
Beyond valuations, another challenge that could further damage UK fintech’s future is talent. For good reason, the government’s decision to raise national insurance contributions is being called a “jobs tax.”
Higher employment costs make hiring and retaining top talent more expensive for startups already struggling with tight margins. At a time of fierce international competition, this policy incentivises fintech founders to set up shop elsewhere, whether in the US, Europe or even the UAE.
And it’s not just about tax rates. Investors are watching how the government supports or stifles innovation. Clunky visa policies, slow-moving regulations, and unpredictable tax changes create uncertainty, which investors dislike even more than high taxes. If the UK wants to keep its fintech crown, it needs to compete not just on capital but also on talent. The world’s best founders will go where they can build and scale without excessive friction.
Why UK Fintech needs recalibration, not decline
So, is the UK truly becoming un-investable? Not yet, but without bold action, the risks are real.
The good news? This isn’t an irreversible decline; it’s a recalibration. While international challenges exist, the UK remains one of the most attractive fintech ecosystems in the world. London still leads Europe in fintech investment, drawing billions in venture capital each year. The infrastructure, talent and regulatory expertise are there.
But if the UK wants to stay competitive, it must address three key areas:
- Reignite the IPO market – The UK needs a more compelling reason for startups to stay and list locally. That could mean reforming listing rules, creating incentives for late-stage growth and making London a destination for high-growth companies again.
- Fix the talent equation – Competitive tax policies, better access to global talent and stronger support for scaling businesses will help founders stay and build in the UK instead of relocating overseas.
- Encourage global investment – The UK must do more to attract international investors, especially as venture capital becomes more selective. That means clearer policies, less political uncertainty and an environment that actively encourages risk-taking and entrepreneurship.
The opportunity that lies ahead
Despite the headwinds, I remain optimistic about the UK fintech sector. Yes, the global investment landscape is shifting, and yes, challenges remain. But the UK has a rich history of financial innovation, a deep talent pool and a regulatory environment that can set the benchmark for fintech excellence worldwide when steered correctly.
With the right recalibration, the UK can position itself as a powerhouse for the next wave of fintech innovation, attracting talent and capital while fostering next-generation businesses. The ecosystem is already home to some of the world’s most successful fintech firms. With proactive policies, smarter regulation, and stronger investment incentives, there is no reason why the UK cannot lead once again.
The question isn’t whether the UK is un-investable. It’s whether we seize this moment to ensure it remains one of the best places in the world to start, scale and invest in fintech.
Nicolai Chamizo is the Founder and CEO of Incore Invest.
