UK Chancellor John Healey is expected to raise taxes on the banking sector in his 28 October budget to address public finances. Industry body UK Finance warned that such moves would weaken competitiveness.
UK Chancellor John Healey is poised to raise the tax take from Britain’s banks in his 28 October budget, according to the Guardian. The move is part of an effort to fix damage inflicted on public finances by the war in the Middle East.
One option under discussion involves reversing cuts to the bank surcharge previously made by Jeremy Hunt. This change would raise upwards of £2bn a year. Industry figures believe this will likely mean raising the surcharge back to 8%, from 3% at present, to help bolster the government’s fiscal headroom, which has been eroded by the jump in borrowing costs this year.
Chancellor Healey has praised the banks as crucial to supporting economic growth. "People too often see them as big, distant financial institutions, when they are hardwired into the economic fabric of this country and our future prospects," Healey told reporters.
Despite the Chancellor's comments, the banking sector has expressed concern. UK Finance, the banking sector trade body, warned that "further increases in bank taxes would weaken competitiveness, discourage investment and job creation, and work against the government’s ambition to deliver growth in every postcode".
Senior banking executives have told the BBC they expect the sector to be "on the menu" at the budget.
The potential tax increase highlights the tension between the government's need to bolster public finances and the banking industry's concerns about competitiveness. With fiscal headroom eroded by rising borrowing costs, the Chancellor is looking to the financial sector for additional revenue, a move that could impact investment and job creation within the UK's financial services industry.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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