{"id":804765,"date":"2026-10-16T19:00:11","date_gmt":"2026-10-16T19:00:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/804765\/"},"modified":"2026-10-16T19:00:11","modified_gmt":"2026-10-16T19:00:11","slug":"target-pensions-or-welfare-not-banks-imf-tells-john-healey-banking","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/804765\/","title":{"rendered":"Target pensions or welfare, not banks, IMF tells John Healey | Banking"},"content":{"rendered":"

The International Monetary Fund has urged John Healey<\/a> to target savings on pensions and welfare, instead of taxing Britain\u2019s banks at the budget later this month.<\/p>\n

Helge Berger, deputy director of the IMF\u2019s European department, was asked about bank taxes after the Guardian revealed Healey plans to tap the sector<\/a> for additional revenue.<\/p>\n

Berger replied that given the UK\u2019s current high tax-to-GDP ratio, it might be better to \u201cput the emphasis\u201d on cuts.<\/p>\n

He said if additional tax revenue were needed, reforming property taxes or VAT might be a good place to start.<\/p>\n

He added: \u201cUltimately, with taxes roughly at 40% of GDP \u2013 historically, for Britain, a high number \u2013 then of course balancing these measures on the fiscal [spending] side, doing a bit more there, makes good sense.\u201d<\/p>\n

As examples, he highlighted the pensions triple lock \u2013 which Labour has already said it will reform<\/a> \u2013 and \u201cbetter targeting [of] social benefits\u201d, adding: \u201cI think that\u2019s where you would put the emphasis, rather than the tax that you mentioned.\u201d<\/p>\n

Berger was speaking in Bangkok, where the IMF has held its annual meetings this week.<\/p>\n

City lobbyists have been out in full force, warning the government that higher taxes could force banks to throttle lending, hitting the economy and even forcing some lenders to move jobs and operations abroad.<\/p>\n

In a letter sent to Healey and copied to the prime minister, Andy Burnham, on 12 October, days before news of the planned tax hike broke, the chief executive of UK Finance, David Postings, shared research commissioned by the lobby group.<\/p>\n

It suggested that reversing Tory cuts to the bank surcharge \u2013 taking it back to 8% from 3% \u2013 would leave annual UK GDP \u00a31.2bn lower in real terms by 2029-30 than it would have otherwise been.<\/p>\n

He said it would also see banks issue fewer business loans and mortgages, with lending likely to be \u00a310.4bn lower in 2029-2030 than if the surcharge was held at 3%.<\/p>\n

\u201cThe UK\u2019s banking sector already makes a vital contribution to the wider economy,\u201d Postings\u2019 letter said. \u201cTo sustain this vital contribution, the budget should avoid any increases in bank-specific taxes, as this would risk constraining the sector\u2019s ability to lend and invest.\u201d<\/p>\n

However, TUC analysis of HMRC corporate tax receipts shows the Treasury has already lost out on \u00a36bn over the three years<\/a> since the surcharge cut came into force in 2023.<\/p>\n

At the same time, banks have been reporting strong profits, largely off the back of high interest rates, with bosses subsequently increasing banker bonus pots and handing billions of pounds to shareholders.<\/p>\n

Collectively, the UK\u2019s four largest lenders \u2013 HSBC, NatWest, Barclays and Lloyds \u2013 reported \u00a329.2bn in profits<\/a> over the first six months of the year, with almost half, \u00a313.7bn, pledged to investors through dividends and share buybacks. Over the past five years, those banks have raked in \u00a3200bn in pre-tax profits.<\/p>\n

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Author and former banker Philip Augar said the banks were \u201cenjoying boom conditions\u201d, partly due to good management but partly due to economic conditions \u201cnot of their own making\u201d. He said there was room for a \u201cmoderate increase in taxation\u201d that would raise about \u00a32bn to \u00a33bn a year.<\/p>\n

\u201cThe prime minister has said that the burden of taxation has to fall on those with the broader shoulders, and at the moment, it\u2019s hard to think of a sector where the shoulders are much broader than the banking sector,\u201d Augar told the BBC\u2019s Today programme on Friday.<\/p>\n

While banks could not expect interest rates benefits to continue forever, Augar said that banks \u2013 including those that were bailed out in the 2008 financial crisis \u2013 could not have it both ways.<\/p>\n

\u201cBanking is cyclical, it\u2019s true. But when it hits really rocky times it expects the taxpayer to bail them out,\u201d Augar said. \u201cWhen it hits boom times, it expects some kind of special treatment. Banks can\u2019t be too big to fail and too big to tax.\u201d<\/p>\n

Some banks have threatened to pull investment, and potentially jobs, from the UK if it hikes taxes, with lobby groups noting smaller overall tax charges in rival financial centres like Frankfurt, Dublin and Amsterdam.<\/p>\n

Jamie Dimon, who heads up the largest bank in the US, JP Morgan, said in May that he could scrap plans for a new \u00a33bn London headquarters<\/a> if the UK government became hostile towards banks.<\/p>\n

But Augar said the government needed to see past the bluster. \u201cThere seems to have been a coordinated campaign by the big international banks who have businesses in Britain \u2013 JP Morgan, Citigroup, Santander, HSBC and others.<\/p>\n

\u201cBut they always say this, [and] they rarely move. I think that if the chancellor judges this right, with a moderate increase in taxation or some other form of getting money from the banks, then the business will remain in the UK.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The International Monetary Fund has urged John Healey to target savings on pensions and welfare, instead of taxing…\n","protected":false},"author":2,"featured_media":804766,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,56,54,55],"class_list":["post-804765","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/804765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=804765"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/804765\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/804766"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=804765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=804765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=804765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}