Bankers warn windfall tax could upend the global financial centre’s status quo
The UK banking sector could face a windfall tax worth up to $113 billion over four years, as the country’s almost-certain next prime minister considers proposals that have set City of London executives and union leaders on a collision course.
The Trades Union Congress wants Andy Burnham, who is set to replace Keir Starmer in Downing Street later this month, to reverse the previous government's cut to the bank surcharge, raising it from 3% back to 8%. Two more aggressive options would lift the surcharge to 16% or 35%, the latter matching the windfall levy the Conservatives once placed on energy firms, raising up to £60 billion (approx. $113 billion).
"Our big four banks in this country are making something like a billion pounds in profits every single week," said TUC general secretary Paul Nowak. "I don't think it's unfair to ask those with the broadest shoulders to help out families who are going to struggle with heating bills."
Bankers have pushed back forcefully. One senior banker told the Guardian: "A bank tax isn't an economic policy; it is economic suicide. Financial services is one of the only parts of the economy that is growing and highly productive. We need more sectors to do the same, not be taxed for being successful. The TUC needs to grow up."
UK Finance communications director Andy Donald said tax rises would undercut competitiveness and could push jobs and capital abroad, noting banks billions in tax and support close to 400,000 jobs. The City of London Corporation went further, calling for the surcharge to be scrapped entirely rather than raised.
Burnham has promised struggling UK households a financial "circuit breaker" this winter, alongside a wider devolution drive shifting power away from Westminster. He has not confirmed whether a bank tax forms part of that package, and one challenger bank told The Banker its board was already assessing the potential fallout, though Burnham is not expected to touch the surcharge in the near term.
