The pinnacle of Britain’s primary banking foyer group has warned the chancellor in opposition to a finances raid on the trade, arguing that it might undermine her purpose of delivering sustainable financial development.
Mr Postings’ letter was despatched earlier this week, simply days after shares within the largest UK banks – together with Barclays, Lloyds Banking Group and NatWest Group – slid amid fears of a renewed tax raid on the sector.
“Both the financial services sector and the wider investor community have… strongly welcomed your clear emphasis – most recently through the Leeds Reforms – on ensuring that the UK’s financial services sector has the right environment to be internationally competitive,” he informed the chancellor.
“As you stated in launching these reforms, it is important to ship certainty for banks working right here and make sure that UK banks can compete internationally and drive financial development.
A report printed final week by the Institute for Public Coverage Analysis (IPPR) think-tank proposed that the chancellor use her November finances to impose an extra levy on financial institution earnings – prompting an investor sell-off of shares in the principle UK lenders.
Anxiousness about increased private and company taxes has gained momentum in current weeks due to the weak outlook for the general public funds, with Ms Reeves needing to fill a multibillion pound black gap to make sure the federal government meets its personal fiscal guidelines.
Treasury insiders have sought to minimize the prospects of such a transfer throughout non-public discussions with financial institution executives in current days, however the timing of Mr Postings’ letter underlines the heightened nervousness within the sector following the sharp restoration in its profitability in recent times.
“As many of our members have recently noted, efforts to boost the UK economy and foster a strong financial services sector would not be consistent with further tax rises on the sector, which already makes a substantial contribution to the public finances,” Mr Postings wrote.
“The emphasis should be on continuing to implement an agenda of regulatory reform that allows for an appropriate adjustment in risk appetite.”
Mr Postings denied that the restoration in financial institution profitability was unreasonable, saying: “UK banks’ net interest margins have only returned to historically more normal levels and are far from excessive.”
He added that the trade had made a file tax contribution of roughly £45bn final yr.
“UK Finance analysis shows that the UK’s total tax rate for model corporate and investment banks is already notably higher than other major financial centres such as Amsterdam, Frankfurt, Dublin, and New York,” Mr Postings informed Ms Reeves.
“This disparity is driven by the permanence of sector-specific taxes in the UK, unlike in other EU jurisdictions where comparable arrangements have been phased out.”
He added {that a} additional tax on the banking trade “would run counter to the government’s aim of supporting the financial services sector and make the UK less competitive internationally, potentially driving capital and investment to other jurisdictions”.
“It would also risk undermining the sector’s ability to drive growth, innovation, and productivity across the UK economy.
“A professional-growth, secure working setting is one of the simplest ways to ship sturdy and sustainable tax revenues, retain expertise and underpin funding throughout the financial system.”
