Chancellor mulls reinstating bank profit surcharge as shares tumble
Bank stocks fell after reports that Chancellor John Healey is considering raising the tax on banks' profits, a move that could reverse Jeremy Hunt's previous cut.
Shares of major UK banks dropped on Friday after reports that Chancellor John Healey is eyeing a revival of the bank profit surcharge, which Jeremy Hunt reduced from 8% to 3%. Lloyds Banking Group, NatWest and Barclays each fell about 2% in early trading, reflecting market concerns over a potential tax hike. The Treasury is seeking ways to curb the budget deficit amid rising borrowing costs, and a higher surcharge could raise up to £2.25 billion annually, according to the TUC.
Union leader Paul Nowak called for an even steeper rate of 16%, citing the sector's record profits. Banking industry body UK Finance warned that such a move would undermine the UK's competitiveness, a view echoed by the Confederation of British Industry. The Treasury said tax decisions will be outlined at the upcoming Budget, scheduled for October 28.
Why it matters
A higher bank tax could reshape UK fiscal policy and affect the competitiveness of its financial sector.
How this story developed
- Oct 11 Inflation pressures could force UK chancellor to add up to £35bn to spending
- Oct 14 The IFS now highlights a £35bn fiscal gap requiring substantial tax measures.
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