Rachel Reeves left red-faced as small EU country predicted to outperform UK

In the wake of Rachel Reeves’ Budget, the UK is set to be outperformed economically by Portugal, according to a report from the European Commission.

The tiny EU state, a popular holiday destination, is rapidly becoming a top spot for capital investors, seeking to benefit from the country’s competitive tax rates and ‘Golden Visa’ scheme.

Under the scheme, those investing £417,000 in particular funds or in a start-up employing six or more, can get a ‘Golden Visa’ that permits freedom of movement within the 29 Schengen states, a path to Portuguese citizenship after five years, family inclusion, and a minimum stay requirement of just seven days per year in Portugal.

As a result, the small country on the Atlantic is projected to grow by 2.5 percent next year – far outstripping the UK’s growth forecasted to be 2 percent in 2025.

Meanwhile, a new report on Portugal’s attractiveness from Ernst & Young (EY), revealed 84 percent of investors, CEOs and entrepreneurs surveyed plan to establish or expand their operations in Portugal in the next 12 months.

EY’s UK equivalent report found that just 68 percent intend to invest in the UK and 72 percent in the rest of the Eurozone.

The EY report on Portugal adds that it “presents itself as an attractive, stable and safe investment destination within the European context”.

Paul Stannard, Chairman and Founder of Portugal Pathways, said: “This is further fuelled by continued demand for the country’s popular Golden Visa residency-by-investment program.”

Mr Stannard adds: “Portugal is one of the safest and most secure places in the world. It welcomes inward investment, entrepreneurs and talent wishing to take advantage of the tax incentives, culture, cost of living, and lifestyle. With more than 300 days of sunshine, it obviously trumps the UK for weather and sardines.

“It also has a strong luxury property market, which is in high demand as the country continues to attract wealthy buyers and investors to Portugal. According to Property Market-Index, Portugal’s real estate market is set to grow by 5.8% in 2024, compared with a 2.5% decline in the UK.

“While other nations continue to struggle, economically and politically, Portugal is proving a haven of stability, investment and growth.”