LONDON (Reuters) -Shares in Britain’s banks rose on Wednesday as lenders escaped a levy on their profits to help plug the gap in public finances as part of Finance Minister Rachel Reeves’s first government budget.
Reeves made no mention of any tax increase on banks in her speech, nor did documents accompanying the budget mention any such tax.
Financial equality campaigners had advocated for an increase in the surcharge that banks pay on their liabilities, known as the bank levy, or a so-called “windfall” tax on their profits.
The FTSE index of UK banks reversed morning losses to rise 1% as Reeves spoke about taxes in other parts of the finance industry without mentioning a new bank levy.
David Postings, CEO of lobby group UK Finance, said in a statement after the budget that the industry was “a significant contributor to the exchequer, including through employment taxes”.
Shares in Barclays and NatWest ended the day firmer after trading flat or down before Reeves spoke. Lloyds closed around 1% lower.
All three banks reported rising profits last week despite a squeeze on income as interest rates start to come down.
The bank levy was introduced in 2011 after the global financial crisis to curb excessive risk and reckless growth.
UK Finance has lobbied for the levy to be phased out, citing its own research that banks in London pay higher tax rates than their peers in New York.
Campaign group Positive Money however has argued that any increase to Britain’s banking surcharge or bank levy should be seen as a reversal of tax cuts given to banks under the Conservative government, not as a tax increase.
($1 = 0.7687 pounds)
(Reporting by David Milliken and Sachin Ravikumar; Additional reporting by Kirstin Ridley; Writing by Lawrence White; Editing by Tommy Reggiori Wilkes and Jan Harvey)
