Rachel Reeves is damaging Britain’s growth prospects with her non-dom tax raid, the boss of Goldman Sachs has warned.

David Solomon said tax policy in Britain was “pushing people away”, warning that the country’s status as a global financial hub was “fragile” after years of over-regulation and high taxes.

It comes after the Chancellor toughened rules introduced by the Tories to phase out the non-dom tax regime, affecting those whose permanent home – or domicile – is deemed to be outside the UK for tax purposes.

The changes have triggered a series of high-profile departures, including Richard Gnodde, Goldman’s vice chairman, who said he was relocating to Milan to avoid being caught by changes to the regime.

Asked if the Government should “revisit” its non-dom rules, Mr Solomon told the Master Investor podcast: “I think when you look at any jurisdiction, tax policy has to make sense, incentives matter. If you create tax policy or incentives that push people away, you harm your economy and you don’t drive revenue increases.

“At the end of the day, most economies have a barbell in terms of tax receipts, and that end of the barbell, where you have very affluent people that have been successful, that pay a significant share of tax, if you push them away, and you push those smart, talented people that are much more mobile away, I think you hurt your prospects for growth.”

Mr Solomon also said the UK’s departure from the European Union had contributed to the erosion of London’s status as a financial centre, with many top bankers moving to Paris and other parts of Europe.

“Today, it’s much, much more dispersed. I think that if you look and you step back, London continues to be an important financial centre. But because of Brexit, because of the way the world is evolving, the talent that was more centred here is more mobile,” he said.

“We as a firm have many more people on the continent in the last five years than we did five to 10 years ago. I think that policy matters, incentives matter, and it’s important that you get that balance right if you want to protect and retain the leadership position that the UK and London has in participating in the broad global financial system. I think it’s fragile.”

Mr Solomon said he was “encouraged” by Ms Reeves’s deregulation drive after the Chancellor warned that red tape was “the boot on the neck” of business at her annual Mansion House speech.

“I’m encouraged, for example, when the Chancellor spoke here about regulation, she’s talking about regulation not just for safety and soundness, but also for growth. Now we have to see the action steps that actually follow through and encourage that,” he said.

Ms Reeves suggested she will make changes to the ring fence rules that separate retail banks from their riskier investing arms, although the government will stop short of removing the regime.

However, she is likely to be met with some resistance from regulators, with Andrew Bailey, the Bank of England Governor, warning against a bonfire of red tape.

Earlier this week, he urged Ms Reeves not to relax the ring fencing rules, describing them as “an important part of the structure of the banking system”.

He added: “It makes resolution of banks, if they get into trouble, much easier, and it benefits, particularly in terms of UK customers and UK consumers, businesses and households. That is a helpful feature of it, I don’t think it hinders banks fundamentally.”

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