UK's potential financial predicament resembles the 1970s debt crisis under Labour, as banks suffer a £8bn loss, according to expert warnings.
Banking Sector Braces for Possible Tax Raid Ahead of Autumn Budget
Speculation is mounting over fresh tax grabs on Britain's banking sector, just weeks before the autumn Budget. The prospect of a new windfall tax has sent shockwaves through the stock market, with banking stocks selling off in response.
Chancellor Rachel Reeves is reportedly planning a tax raid on the sector, a move that has sparked concerns about its potential impact on the economy. Leading economists have warned that if Labour continues down this path, the UK could be lurching towards a 1970s-style debt crisis and even an IMF bailout.
The sell-off was evident in early trading, with shares across the FTSE 350 tumbling by up to 2.3%. Barclays and Lloyds slumped 3.7% and 4.2% respectively, while NatWest was hit hardest, down 5.1%, wiping £2.2bn off its market value. HSBC dipped 1.3%.
The alleged practice of forcing banks to hand over more profits through a levy on their cash reserves at the Bank of England creates the illusion of fiscal headroom for the UK government. However, this could potentially lead to a significant drain on the banking sector's resources.
The Office for National Statistics (ONS) has been accused of downplaying the real scale of national debt through 'Bank of England' accounting tricks. Top financial analyst, Bob Lyddon, has exposed how the ONS deducts £200 billion from reported debt.
In May, deputy PM Angela Rayner urged Reeves to hike corporation tax on banks, which they believe could raise up to £4bn a year. However, no specific warnings about the UK being endangered by potential taxation of the banking sector leading to a 1970s-style debt crisis and IMF bailout were found in the search results.
Despite the turbulence in the stock market, the UK's stock market remains robust. According to Bloomberg data, the UK has surpassed France to become Europe's largest stock exchange, with a combined worth of $3.18 trillion (£2.51 trillion).
Market watcher David Morrison at Trade Nation stated that the sell-off is a clear indication of the fears surrounding the potential new windfall tax. As the autumn Budget approaches, the banking sector will be closely watching developments, hoping for clarity and stability.
Read also:
- President von der Leyen's address at the Fourth Renewable Hydrogen Summit, delivered remotely
- Unveiling Innovation in Propulsion: A Deep Dive into the Advantages and Obstacles of Magnetic Engines
- Intensified farm machinery emissions posing challenges to China's net-zero targets
- EU Fuel Ban Alerts Mercedes Boss of Potential Crisis
