A modest increase in bank taxes is not the end of the world for lenders | Nils Pratley
News Source
β’Tue, 20 Oct 2026 08:00:20 GMT
π° What Happened
The UK chancellor may raise taxes on banks next week. John Healey is hunting for money to meet fiscal rules. A report says the bank surcharge could double to 6 percent. UBS says that would cut bank profits by only 2 percent on average.
Banks argue higher taxes hurt savers and borrowers. They say loans get pricier and deposits pay less. But analysts say the change is modest. Banks are doing well with low defaults and high interest rates.
π The Backstory
Britain taxed banks more after the 2008 financial crash. The surcharge added extra tax on top of normal rates. Governments often turn to banks when budgets run tight. It is easier than cutting services or raising other taxes.
Bank profits have been strong in recent years. Returns are heading toward 20 percent on equity. So ministers see room to take a little more. The question is how far they will go.
π― Why It Matters
Bank taxes quietly affect everyone's loans and savings. Rules that hit banks can change interest rates for customers. Budget choices decide who pays for public services.
The UK chancellor may raise taxes on banks next week. John Healey is hunting for money to meet fiscal rules. A report says the bank surcharge could double to 6 percent. UBS says that would cut bank profits by only 2 percent on average.
Banks argue higher taxes hurt savers and borrowers. They say loans get pricier and deposits pay less. But analysts say the change is modest. Banks are doing well with low defaults and high interest rates.
Britain taxed banks more after the 2008 financial crash. The surcharge added extra tax on top of normal rates. Governments often turn to banks when budgets run tight. It is easier than cutting services or raising other taxes.
Bank profits have been strong in recent years. Returns are heading toward 20 percent on equity. So ministers see room to take a little more. The question is how far they will go.
Bank taxes quietly affect everyone's loans and savings. Rules that hit banks can change interest rates for customers. Budget choices decide who pays for public services.