Concerns raised over potential impact on jobs and investments
Barclays chief executive C.S. Venkatakrishnan (pictured top) has voiced strong opposition to proposals for increasing taxes on British banks, cautioning that such measures could lead to reduced lending and job cuts within the sector.
Speaking to CNBC, Venkatakrishnan argued that UK banks already faces one of the world’s highest tax rates. “If I can use big words, it’s a facile and fallacious logic,” he said. “The banking sector in the UK is already paying a tax rate of 48%, higher than almost any other banking sector. New York is like 26%, and even the highest in Europe is like 39%, so adding to that is not a path towards economic growth.”
Currently, banks in the UK pay a 3% surcharge on top of the standard 25% corporation tax. However, Venkatakrishnan referred to the “total tax rate,” a broader measure that includes all direct taxes as a proportion of commercial profits. This figure, compiled by PwC for UK Finance, highlights the overall tax burden on banks.
Reports suggest the government is considering raising the bank surcharge by up to 2% in the upcoming autumn budget to help address an estimated £20 billion shortfall. The move comes as the government faces increased borrowing costs due to higher inflation expectations and has been forced to reconsider welfare cuts following public and political pressure.
Venkatakrishnan warned that a higher levy would force banks to seek efficiencies, limit recruitment, and reduce the availability of credit. “We would have to find ways to get greater productivity, pull back on hiring, and actually issue less credit into the UK economy,” he said.
Raising UK bank taxes by 'pro-business government' follows 'facile and fallacious logic,' Barclays CEO says https://t.co/dCOig8ebv7
— CNBC (@CNBC) September 10, 2025
The Barclays CEO explained that higher taxes would leave less capital available for reinvestment. He also emphasised the importance of the financial services sector, which represents around 10% of the UK economy and is a key source of export revenue.
Other industry leaders have stated the same concerns. Charlie Nunn, chief executive of Lloyds Banking Group, has previously warned that increasing taxes on banks would undermine the government’s efforts to stimulate economic growth through the financial services industry. Like Venkatakrishnan, Nunn also pointed out that the UK already imposes one of the heaviest tax burdens on banks among major economies.
David Postings, chief executive of UK Finance, has similarly cautioned that higher bank taxes could damage the sector’s global competitiveness and hinder sustainable economic growth. In a letter to Chancellor Rachel Reeves, he warned that speculation over tax hikes was undermining investor confidence, especially after recent declines in bank share prices.
Proposals for increasing taxes on UK banks followed a report from the Institute for Public Policy Research recommending an additional levy on bank profits, which contributed to a sell-off in the sector. While Treasury officials have downplayed the likelihood of a further tax increase, concerns remain as the government seeks to address a significant budget shortfall.
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