The IMF advises the chancellor to cut pensions and welfare instead of raising taxes on banks, while supporters argue banks, bailed out by taxpayers in 2008, can afford to pay more.
01Summary
- 01Helge Berger of the IMF said the UK’s high tax-to-GDP ratio of about 40% justifies spending cuts rather than new bank taxes.
- 02The Treasury lost £6bn over three years since the bank surcharge was cut from 8% to 3% in 2023.
- 03UK Finance warned reversing the surcharge to 8% could cut GDP by £1.2bn and reduce lending by £10.4bn by 2029-30.
- 04The four largest UK lenders reported £29.2bn in profits in the first six months of 2024, with £13.7bn returned to shareholders.
- 05Author Philip Augar called bank threats to relocate ‘bluster’, noting they rarely move jobs despite warnings.
02Why it matters
This matters because the budget later this month will decide whether banks face higher taxes or spending cuts hit pensions and welfare, affecting household incomes and the cost of borrowing for businesses and homeowners.
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