Sector confidence builds ahead of Budget announcement
Stock valuations for major banking institutions in the UK climbed during early trading on Tuesday following indications that financial services may avoid additional taxation in the tomorrow's Budget announcement.
Major lenders—including Lloyds, Barclays and NatWest—saw share prices rise by more than 2%, contributing to the broader market's upward trajectory for the day.
The upturn emerged following reports that the Treasury had requested the banking community to issue favourable remarks regarding the following day's statement, signalling a likelihood that sector-specific tax increases would be avoided.
"Reports that UK banks might get a reprieve in this week's budget from previously floated new tax measures helped give the likes of Lloyds, Barclays and NatWest a lift and underpinned the FTSE 100's rise on Tuesday," Dan Coatsworth, head of markets at AJ Bell, said in a report by The Guardian.
"It suggests that some intense lobbying by the industry has paid off, although U-turns have been a theme in UK politics for some time, so banking boardrooms may not breathe a full sigh of relief until Rachel Reeves has sat down tomorrow afternoon."
Reeves asks banks to praise her plans as they escape Budget tax raid https://t.co/Kmwt0BpJSg
— FT UK Politics (@ftukpolitics) November 24, 2025
The prospect of fresh banking levies has dominated industry discussions since August, when the IPPR institute proposed that the Chancellor consider imposing a new tax on financial institutions, arguing that banks benefit substantially from quantitative easing measures introduced following the 2008 financial crisis.
The sector has mounted a sustained campaign against further taxation, citing existing obligations. Banks argue they currently bear a combined tax burden of approximately 45.8% when employment taxes and VAT are included—substantially higher than the 38.6% rate in Frankfurt or 27.9% in New York.
Industry representatives contend that increased taxation could necessitate curtailment of lending activity, potentially offsetting gains from the Chancellor's regulatory reform programme launched earlier this year to promote economic expansion across the financial services sector and wider economy.
Optimism among banking leadership was tempered recently when it became apparent that the Treasury was reconsidering its earlier position. However, recent reporting suggesting positive indications from the Treasury has restored industry confidence.
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