Chancellor John Healey is reportedly set to increase taxes on Britain's banks in his budget on 28 October. The Guardian understands this measure is intended to help mitigate the impact of the Middle East conflict on public finances.
Healey is currently in Bangkok, where the International Monetary Fund has commended the UK's progress in balancing its books and urged him to continue on this path. To maintain the Treasury's deficit reduction plans amid rising government borrowing costs, Healey is understood to have decided to seek additional revenue from the financial sector.
One potential action under consideration is reversing previous cuts to the bank surcharge, which could generate more than £2 billion annually. Industry figures believe this would most likely involve raising the surcharge back to 8% from its current 3%.
The TUC's general secretary, Paul Nowak, has called for banks to pay their "fair share," citing strong earnings and record bonuses. However, bank bosses, including those from HSBC, Lloyds, NatWest, Barclays, and Santander, have lobbied against tax increases, warning of potential impacts on investor confidence and the relocation of staff and business.
Conservative leader Kemi Badenoch has also cautioned against further banking tax rises, stating the sector already faces a higher effective tax rate than many other global financial centres.