The International Monetary Fund (IMF) has urged John Healey to consider savings on pensions and welfare instead of increasing taxes on Britain's banks in the budget later this month. Helge Berger, deputy director of the IMF’s European department, made the recommendation after reports indicated Healey's plans to seek additional revenue from the banking sector.
Berger suggested that with the UK's tax-to-GDP ratio at approximately 40%, a historically high figure for Britain, it might be more effective to focus on cuts. He cited the pensions triple lock and better targeting of social benefits as areas for emphasis, or reforming property taxes or VAT if additional tax revenue is deemed necessary.
City lobbyists have warned that higher bank taxes could reduce lending, impacting the economy and potentially leading some lenders to relocate jobs and operations abroad. UK Finance chief executive David Postings stated in a letter to Healey that reversing cuts to the bank surcharge could result in annual UK GDP being £1.2bn lower in real terms by 2029-30 and £10.4bn less in business loans and mortgages.
Conversely, TUC analysis indicates the Treasury has lost £6bn in corporate tax receipts since the surcharge cut in 2023. Banks have reported strong profits, with the four largest UK lenders collectively reporting £29.2bn in profits over the first six months of the year. Author and former banker Philip Augur suggested there is room for a "moderate increase in taxation" of £2bn to £3bn annually, arguing that banks, which were bailed out in 2008, cannot be "too big to fail and too big to tax."