One-fifth of Britain's fastest growing start-ups could relocate abroad by 2028 unless the Government's ramps up its pro-growth business plans, research suggests.

Businesses surveyed by Virgin Media O2 warned of regulatory burdens, political uncertainty, difficulties accessing funding, infrastructure shortcomings and talent shortages hitting Britain.

Britain is at risk of a 'start-up exodus', compounding £100billion of value that left London's capital markets last year, the telecoms giant said in its 'Growth Signals' report. 

Eighty-eight business quit the London Stock Exchange in 2024 in a bid to ramp up growth overseas. 

In a survey of more than 2,000 'high-growth' firms, including artificial intelligence and quantum start-ups, 85 per cent said they wanted to stay put in Britain.

However, twice as many start-ups view the US as a better place to grow their business in Britain, the report added. Singapore and certain locations within the European European were also viewed more favourably. 

Unless radical action is taken at Government level, one in five of the fast-growing firms surveyed said they would exit Britain within three years. 

Fifty-six per cent of start-ups surveyed said they had 'declining confidence' in Britain as a place for growth.  

Lutz Schüler, chief executive of Virgin Media O2, said: 'Bold and innovative businesses are created here in Britain because it cultivates home-grown talent with the ambition to match. 

'But too many of the fastest growing companies can’t see a route to scale in the UK and are now looking to prosper abroad.'

He said: 'With an AI powered economic revolution already underway, the question is now whether Britain leads or follows. Decline is not inevitable.

'This is a country that can maintain its place in the world economic stage and win if it fixes the frictions founders face every day.' 

Schüler also flagged 'short-term policy making that makes it hard to plan' as a major issue for fledgling and established businesses.  

The report added: 'Entrepreneurs call on government to create the “environment to match our ambition” by prioritising agile regulation, capital incentives, future-proof digital networks, AI-ready talent and long-term certainty.' 

Virgin Media O2 said the Government should prioritise 'AI-ready talent', long-term certainty for businesses, future-proofed digital networks and 'agile regulation' encompassing 'responsive frameworks that keep pace with emerging technologies.' 

Daniel Kim, chief finance officer at AI video creator Synthesia and a contributor to the report, said: 'Britain is home to one of the strongest start-up ecosystems in the world, but barriers are holding too many innovators back from scaling into global success stories - the kinds of businesses our economy needs to drive economic growth.' 

While some high-growth start-up have their sights overseas, others remained more optimistic about Britain's prospects. 

Forty-seven per cent of firms surveyed said they were upbeat about Britain's long-term economic prospects, citing high-quality research institutions, a solid international business environment and strong legal and regulatory frameworks. 

Rachel Reeves has piled pressure on businesses since coming into power as Chancellor. A hike in employer national insurance contributions and wages is adding vast sums to many businesses' cost bases. 

The Confederation of British Industry claimed this month that Labour should break its manifesto pledges rather than heaping further taxes on businesses. 

The business lobbying group claimed increasing taxes for companies further would risk 'stalling' the Chancellor’s quest for economic growth.