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As the UK government hunts for economic growth, one idea is arguably staring them in the face.

Reverse course on some of its plans for non doms and introduce an Italian-style flat tax for wealthy foreign investors.

The financial logic is straightforward but selling the idea to its own party isn鈥檛. There the government was reconsidering parts of its plan but there was no mention of a key stumbling block.

The search for growth comes as the Treasury鈥檚 financial headroom shrinks and a succession of economic data points in the wrong direction.

Borrowing costs have risen since the Chancellor set out plans to borrow and spend more in the Budget. They spiked higher earlier this month due to inflationary concerns around Donald Trump鈥檚 presidency, though have since fallen back.

that rising debt costs had wiped out £8.9 billion of the Chancellor鈥檚 £9.9 billion headroom, which means she could be forced to raise taxes or cut spending. Against a backdrop of , an last week increased the pressure on her.

The Office for Budget Responsibility will deliver its latest economic forecasts and verdict on the Chancellor鈥檚 financial room for manoeuvre on 26 March.

Number 11 has to suggest ideas for growth and recently-floated plans include airport expansions and loosening mortgage lending rules. Treading on the toes of net-zero supporters by considering a third runway at Heathrow must make the idea of encouraging inward foreign investment through the tax system seem less controversial?

The (FIFB) lobby group hopes so and believes there are signs the government is prepared to look again at its plans for non doms given the worsening economic backdrop.

鈥淭he government is waking up,鈥� Leslie MacLeod-Miller, chief executive of FIFB told 博鱼体育集团 Frank. 鈥淭hey need to give a clear signal that Britain supports growth and investment before it is too late. This is now the final call, and the flight is about to leave taking investments 鈥� and tax revenue, spending into the economy, job creation and philanthropy - with them.鈥�

Under the old scheme, non doms didn鈥檛 pay tax on their non-UK income for up to 15 years under a set of rules that date back more than 200 years. Around 74,000 non doms contributed £8.9 billion in UK taxes in 2022/23.

The new residence-based scheme from April introduces a four-year cap, which means the scheme is less attractive than other countries including Italy, where foreign investors pay an annual flat tax for a maximum of 15 years.

On Thursday, it was reported the government will tweak the so-called 鈥渢emporary repatriation facility鈥� for foreign investors, which means they can bring in overseas capital at low rates of tax under the new scheme.

However, there was no mention of the biggest stumbling block of making overseas trusts subject to inheritance tax.

Opposition party amendments are likely to push back against the inheritance tax plans, as well call for a system closer to the Italian model 鈥� a so-called tiered tax regime

How receptive the government is, depends on how politically palatable the plans are within its own party. But as more investors leave the UK and stamp duty becomes one area where government revenues are being lost, it feels like backs are moving closer to the wall inside Whitehall.

鈥淥ur Oxford Economics commissioned data found that 83% of foreign investors said that UK inheritance tax on overseas assets was the redline,鈥� said MacLeod-Miller. 鈥淎s part of the Tiered Tax Regime, foreign investors would pay between £200,000 and £2 million a year 鈥� with protection from draconian UK taxes being levied upon assets which have never had a connection to the UK. In this way foreign investors win, the government wins and the public win as funds will flow into to vital frontline public services.鈥�