CBI Warns Proposed Bank Tax Would Harm UK Economy

The Confederation of British Industry (CBI) is cautioning Chancellor John Healey, warning that a potential increase in the tax rate on banks would be detrimental to the UK economy. In a pre-Budget appeal, CBI chief Rain Newton-Smith stated that such a measure would harm Britain's global competitiveness.

Healey is widely expected to raise the surcharge that banks pay on corporation tax, which currently stands at 3 percent. Proponents of the tax hike suggest that banks can afford to contribute more due to increased profits driven by rising interest rates, while the government seeks additional revenue to fund cost-of-living support measures. However, the banking industry contends that it already faces a higher tax burden compared to financial centers like Frankfurt and New York.

Newton-Smith highlighted that while London is a key financial hub, the sector supports over 650,000 jobs across the UK and contributes more than £200 billion annually to the economy. "We want our strongest sectors to keep getting stronger – because that is where growth comes from," she said. "Our financial sector already faces a higher tax burden than other global centres. Adding to that would be an own goal for our competitiveness. The Budget next week must be about giving business breathing space and backing wealth creation."