The Chancellor has a lot of work to do ahead of next week’s Budget to convince tech founders that the UK is on the right track.

First came rumours that the Treasury was tinkering with a hefty “exit tax” for emigrating entrepreneurs, an idea that garnered immediate and ferocious backlash, enough so that the government announced it was dropping the proposal, despite it never being officially introduced.

Then, fresh figures last week raised fears that the country could soon lose a swathe of its high-growth startups, with one in five set to flee for distant shores in search of more opportunity, and less red tape.

And now, to add yet another headache for Rachel Reeves, fintech founders are losing faith in the UK economy, with a new report showing a sharp drop in confidence, as nearly twice as many founders as last year doubt the country’s chances of broader economic growth.

According to the seventh annual Fintech Founders Survey, 81% of fintech entrepreneurs say they don’t feel confident in the UK’s economic outlook for 2026, up from just 46% a year ago, with just 1% reportedly “very confident” that the country can deliver meaningful growth.

Access to funding (41%), mounting regulation (40%), and uncertain market conditions (40%) were cited as the main challenges facing fintechs, all of which led 75% of founders to agree the UK is no longer positioned to be a world leader in the fintech sector – the highest level of scepticism recorded in recent years.  

Reduced investment, high inflation, rising geopolitical tensions, and a slow post-Covid recovery all added to the general feeling of economic oppression, with the report warning that low confidence among fintech founders was leaking into their plans for scaling their businesses.

In an otherwise stark overview of the UK’s fintech landscape, the report found some faint silver linings. The first is that, despite the doom and gloom attitude for the wider economy, the vast majority of founders (92%) are confident in their own business prospects in the short term.

While that could potentially be put down to hubris, it means that most fintechs (54%) still aren’t considering a move overseas – though the number that are has gradually increased since 2023.

Overall, though, these figures will no doubt hit the Labour government hard as it approaches a milestone Budget, one that promises to either make or break the much-bandied “Plan for Change” that vowed to cement the UK’s position as a modern economic powerhouse. 

Fintechs are critical to this mission, and the government has tried hard to kickstart financial services growth, with the Chancellor having unveiled a package of reforms last year to drive competitiveness and cut red tape for the sector.

Both the CMA and FCA have formed part of these efforts, with the government asking its regulators to shift gears in the search for boosting British business, with both watchdogs told to prioritise growth.     

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According to the Fintech Founders survey, that hasn’t been an overwhelming success. The study found dissatisfaction with both the FCA and Prudential Regulation Authority to be rife, with 44% of founders rating the current regulatory landscape as “acceptable”, and a third (33%) describing it as either “awful” or “poor”.

That stretches to how regulators are dealing with fintechs’ booming AI uptake, another central part of the government’s plan, with the majority (42%) saying current frameworks are too risk-averse, and a quarter (26%) wanting better guidance on AI compliance.

Put together, these issues mean that almost half (47%) of fintech founders rate the government’s current approach to the sector as either “awful” or “poor”, versus 0% who think it excellent.

With Reeves about to blow the dust off her red briefcase, the UK’s fintech founders will be keeping their fingers crossed for some concrete signals that the country is serious about scaling innovation and creating a path to global competitiveness.

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