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shares Banks in Britain rose after reports they would be exempt from a tax increase in Wednesday’s budget.
Lloyds Banking Group, Barclays and natwest They were among the biggest risers on the FTSE 100 on Tuesday morning, with their share prices rising by almost 2%.
banks It is believed that they were targeted because of a possible increase in bank levies.
This is an additional tax on the balance sheets of banks and building societies operating in the UK.
The Institute for Public Policy Research (IPPR) said in August that increasing the levy on the profits of British banking giants could raise up to £8 billion a year for public services.
But chancellor is preparing to avoid hitting lenders with higher taxes and instead will call on them to show how they plan to improve lending to first-time buyers and small businesses. financial Times (FT) reported.
It follows a sustained period of lobbying between bank chiefs and city leaders who have argued that higher taxes would be contrary to their pro-growth mission.
Barclays boss CS Venkatakrishnan said in an interview with the FT in September that “the path to growth does not lie in taxing the sector more”.
Lloyds chief executive Charlie Nunn also warned of tax measures that would reduce the competitiveness of the UK financial services sector.
Gary Greenwood, an equity analyst at Shore Capital, said the “tradeoff” to avoiding a tax increase is that big banks “will need to demonstrate a willingness to grow even faster than that to support the economy”.
He said this could mean investing more in reducing pricing to “create additional demand for credit” rather than “taking advantage of higher interest rates” by handing over more cash to shareholders.
But he also said the market was “likely to take a sigh of relief” from the reports and the fact that the Chancellor is “recognising the importance of the banking sector to growing the economy”.
The Treasury has been contacted for comment.