The chief government of Barclays has warned the federal government in opposition to pushing up public sector pay or elevating additional taxes on banks as chancellor Rachel Reeves searches for tactics to plug a looming fiscal hole.
CS Venkatakrishnan mentioned curbing authorities spending and tackling wage-driven inflation must be priorities as ministers put together the November finances.
Chatting with the Monetary Instances, Venkatakrishnan mentioned: “We have to curb expenditure on the authorities degree. We have to discover a method to curb wage inflation.” Whereas UK wage progress has slowed, public sector pay continues to be operating at an annual price of 5.7 per cent, in contrast with 4.8 per cent within the personal sector.
The Barclays boss additionally urged ministers to not deal with banks as a tax goal. “UK banks are taxed greater than banks wherever else. How rather more are you going to squeeze this?” he requested, pointing to an efficient complete tax price of 46 per cent on UK lenders final 12 months, in contrast with 28 per cent in New York and as much as 39 per cent within the EU. Barclays alone paid £1.4 billion in tax in 2023, on pre-tax earnings of £5.7 billion.
Considerations have grown throughout the sector that wholesome earnings, buoyed by larger rates of interest, might set off a recent windfall levy as Reeves comes beneath strain to lift revenues. UK financial institution shares shed greater than £6 billion in worth final month after renewed hypothesis over tax hikes spooked traders. Venkatakrishnan warned that additional will increase would undermine London’s standing as a world monetary centre, arguing that “the trail to progress doesn’t lie in taxing the sector much more”.
Though Venkatakrishnan has been broadly supportive of the Labour authorities’s pro-business stance since its election final summer time, his intervention highlights tensions because the chancellor balances fiscal consolidation together with her pledge to foster progress. Different financial institution chiefs, together with Lloyds’ Charlie Nunn, have additionally cautioned that larger taxation can be inconsistent with Reeves’ efforts to spice up competitiveness and entice funding within the Metropolis.
