The IMF has advised John Healey to pursue savings in pensions and welfare instead of introducing higher taxes on Britain's banks. Helge Berger, deputy director of the IMF's European department, said that given the UK's current tax-to-GDP ratio of roughly 40% - historically high for Britain - reforming property taxes or VAT might be preferable. He highlighted the pensions triple lock and better targeting of social benefits as areas where the emphasis should lie.
The IMF's intervention comes as The Guardian revealed plans for additional bank taxation. City lobbyists have warned that higher taxes could force banks to reduce lending. UK Finance, a banking lobby group, commissioned research suggesting that reversing Tory cuts to the bank surcharge from 3% back to 8% would leave annual UK GDP £1.2bn lower in real terms by 2029-30, with lending likely to be £10.4bn lower in the same period.
However, supporters of a bank tax note that the Treasury has lost £6bn over three years since the surcharge was cut in 2023, according to TUC analysis of HMRC corporate tax receipts. Meanwhile, Britain's four largest lenders - HSBC, NatWest, Barclays and Lloyds - reported £29.2bn in profits over the first six months of this year, with £13.7bn pledged to shareholders through dividends and buybacks.
Some banks, including JP Morgan, have threatened to reduce investment and jobs in the UK if taxes rise. But former banker Philip Augar said banks could afford a "moderate increase in taxation" raising £2bn to £3bn annually, arguing that when the sector "hits boom times, it expects some kind of special treatment."