John Healey is poised to increase the banks surcharge in his 28 October budget, with ministers believed to be considering raising the levy from 3% to 8%, a move that would raise upwards of £2 billion a year. Healey made the comments while in Bangkok at the IMF meetings, where the fund praised the UK’s progress towards balancing the books and urged him to stay the course. Officials want extra revenue to offset higher government borrowing costs linked to the Middle East war, which analysts say could roughly halve the £24 billion fiscal headroom Rachel Reeves had built in March. The UK’s four largest lenders, HSBC, NatWest, Barclays and Lloyds Banking Group, generated about £200 billion in pre-tax profits over the past five years, a tally critics such as TUC general secretary Paul Nowak point to when urging higher bank taxes. Bank lobby groups and executives, including warnings echoed by JP Morgan’s Jamie Dimon, told Healey higher levies would weaken investment and could force jobs and activity abroad; UK bank bosses met Healey last week but received no reassurance that hikes were off the table. Healey praised banks as central to economic growth but is understood to be minded to raise the surcharge to protect deficit reduction plans while signalling commitment to bond markets. If implemented on 28 October, the surcharge rise would be a concrete revenue source for the Treasury and a focal point for industry lobbying and potential market reaction in the weeks after the budget.
