Chancellor Reeves Faces Bank Tax Warnings Ahead of First Budget
Chancellor Rachel Reeves faces warnings and proposals regarding new taxes on Britain's financial sector. Bank CEOs and think tanks have weighed in ahead of her first Budget.
Barclays CEO CS Venkatakrishnan and Lloyds CEO Charlie Nunn have cautioned Reeves against fresh levies on banks. Venkatakrishnan argued that such a move could 'tax growth out of existence' and lead to fewer jobs and less lending. Nunn echoed these concerns, citing competitiveness issues. Meanwhile, think tanks close to Labour, such as the Institute for Public Policy Research (IPPR), have proposed a windfall levy on banks to fund public services and reduce inequality. The IPPR claimed the Treasury is losing £22 billion annually due to the Bank of England's bond offloading and higher interest on reserves. Venkatakrishnan previously dismissed the logic behind a windfall tax as 'facile and fallacious'. Shares in major lenders fell earlier this year after the IPPR's proposal, wiping billions from the sector's market value. These warnings come weeks before Reeves' first Budget, where she is expected to unveil tax increases to plug a public finance gap.
Reeves must navigate these warnings and proposals as she prepares her Budget. The Treasury has insisted the government is 'pro-business', highlighting its Leeds Reforms to cut red tape in financial services. However, the Chancellor will need to balance the needs of the economy with the demands for increased revenue and fairness.
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