More than £6 billion was wiped off the value of British banks yesterday amid concern that the Chancellor will impose taxes on the sector to help fill a black hole in the public finances.
Shares in NatWest (RBS), Lloyds Banking Group, Barclays and HSBC slumped after a think tank called on Rachel Reeves to impose a windfall levy on the industry.
The proposal from the Institute for Public Policy Research has heightened fears that the Treasury is looking at the current buoyancy of the banks as a new source of income.
However, the banks say they are being punished for their success and too much tax will be bad for the economy as it might affect their ability to support business. Lenders pay a corporation tax surcharge as well as a separate levy on their balance sheets.
They have pointed to the apparent contradictory messages emerging from the Treasury after Rachel Reeves pledged that the financial services sector would be at the heart of her plan to stimulate growth, including measures to cut regulation.
The tax talk saw NatWest shares fall by 26p to 510.5p, while Lloyds slid by 2.75p to 79.5p. Barclays fell 8.25p to 360.5p and HSBC lost 9p to 946.75p.
A spokesman for the Treasury said: “The best way to strengthen public finances is by growing the economy, which is our focus. Changes to tax and spend policy are not the only ways of doing this.”
The latest developments could be a topic of conversation at the inaugural Edinburgh Finance Festival which runs from 15 to 26 September and will attract more than 2,500 delegates to the
city.
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