Barclays chief executive CS Venkatakrishnan has issued a stark warning to Chancellor Rachel Reeves, urging her not to introduce new levies that would “stifle competition and growth” in Britain’s financial sector.
Speaking in an interview with CNBC, Venkatakrishnan said taxing banks and investors more heavily risked “taxing growth out of existence,” just weeks before Reeves unveils her first Budget.
His remarks come amid speculation that the Chancellor could raise as much as £50 billion in extra taxes to plug a hole in the public finances. Think tanks close to Labour, including the Institute for Public Policy Research (IPPR), have floated the idea of a windfall levy on banks, claiming lenders have enjoyed outsized benefits from the Bank of England’s money-printing programme during the financial crisis and Covid.
Venkatakrishnan pushed back, warning that a banking tax raid would ultimately mean fewer jobs and less lending to British businesses. “You need to encourage [growth] to expand, not tax it out of existence,” he said.
Shares in major lenders including Lloyds, HSBC and NatWest fell earlier this year after news of the IPPR’s proposal, wiping billions from the sector’s market value. The think tank claimed the Treasury was losing £22 billion annually as the Bank of England offloaded bonds at a loss and paid higher interest on reserves.
The Barclays boss is not alone in sounding the alarm. Lloyds chief executive Charlie Nunn has also told Reeves that targeting banks with fresh levies would undercut Britain’s competitiveness at a time when the Government is trying to attract global investment.
Venkatakrishnan has previously described the logic behind a windfall tax as “facile and fallacious,” warning it would choke off credit to households and companies alike.
A Treasury spokesman insisted on Friday that Reeves’ government remains “pro-business” and highlighted its Leeds Reforms designed to cut red tape in financial services. “We want Britain to be the number one destination for financial services firms by 2035,” the spokesman said.
With Reeves under pressure to raise tens of billions in November, the battle lines are now being drawn between the City and the Treasury.
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Barclays boss warns Reeves: don’t tax growth ‘out of existence’