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Tax hike could stimulate 'brain drain', warn experts

The chancellor’s decision to raise the top rate of income tax to 50 per cent could result in a so-called brain drain, whereby top earners look to invest their monies elsewhere.

Sean Drury, international mobility partner at PricewaterhouseCoopers says the move is an "unwelcome challenge to competing effectively".

"Countries like Switzerland will look increasingly attractive to some of the people in the key industries needed to lead the UK out of the recession," the Guardian reported he said.

Darling’s budget received a mixed reception: the Times said the top rate for people earning more than £150,000 will drive people out of the country.

The paper’s Antole Kaletsky claims it was the economies "of Switzerland, Luxembourg, Jersey, Hong Kong and other low-tax jurisdictions" which were saved by yesterday’s announcement.

The Mirror, however, was more forgiving – it says the chancellor deserves credit "for boldly striving to create a fairer tax system, ensuring those with the deepest pockets pay more tax to protect services and help the jobless and pensioners".

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