Bank shares rise after reports they will be spared tax hike amid growth mission
Shares in UK banks have risen following reports that they will be spared from a tax hike in Wednesday’s Budget.
Lloyds Banking Group, Barclays and NatWest were among the biggest risers on the FTSE 100 on Tuesday morning with their share prices up by about 2%.
Banks were thought to have been in the firing line through a potential increase to the bank levy.
This is an additional tax on the balance sheets of banks and building societies operating in the UK.
The Institute for Public Policy Research (IPPR) said in August that hiking a levy on the profits of British banking giants could raise up to £8 billion a year for public services.
But the Chancellor is preparing to avoid hitting lenders with higher taxes and will instead call for them to show how they plan to improve lending to first-time buyers and small businesses, the Financial Times (FT) reported.
It follows a sustained period of lobbying among bank chiefs and City leaders who have argued that higher taxes would be at odds with their pro-growth mission.
The boss of Barclays, CS Venkatakrishnan, said in an interview with the FT in September that the “path to growth does not lie in taxing the sector even more”.
Lloyds chief executive Charlie Nunn also cautioned over tax measures that would reduce the competitiveness of the UK’s financial services sector.
Gary Greenwood, an equity analyst for Shore Capital, said the “quid pro quo” for being spared tax rises is that the big banks “will need to demonstrate a willingness to grow even faster than they are doing in order to support the economy”.
He said this could mean investing more into lowering pricing to “create additional demand for credit” rather than “harvesting the benefits of higher interest rates” by handing out more cash to shareholders.
But he added that the market was “likely to breathe a sigh of relief” over the reports and the fact that the Chancellor was “recognising the importance of the banking sector to growing the economy”.
The Treasury has been contacted for comment.
Support our Nation today
For the price of a cup of coffee a month you can help us create an independent, not-for-profit, national news service for the people of Wales, by the people of Wales.
I’m sick of all this Budget kiteflying. Here we see banks and bank investors making money out of a fiscal exercise which will probably see low and middle income people becoming worse off and services diminished. None of these things should be flagged up before the Chancellor’s speech. The whole process is stacked against ordinary people. Blatantly.
Another triumph for the lobbyists – advised by current and former politicians including members of the House of Lords, and retired civil servants and members of the armed forces.
They need to do what’s right not what’s populist. That means explaining the manifesto was based on the assumption that Labour could make a better dog’s breakfast out of Brexit than the Cons. They should admit their error and release a Nick Clegg apology video saying sorry we were wrong about Brexit having a chance, now it’s time to pay.for it.
I will be surprised if this so called Labour government targets the wealth in this country tomorrow. It”ll probably be the usual we must all pay our fair share if we want the public services. The trouble is is not everyone is paying their fair share. The more money you have, or the bigger your business, the money you can find the fancy accountants to tackle HMRC. The rest of us will be left to pick up the slack as usual. Millionaires and billionares know they are not paying enough. A group of them are even touring the country making… Read more »