Target pensions or welfare, not banks, IMF tells John Healey
Supporters of planned tax, however, say banks were bailed out by taxpayers during financial crisis and can afford to pay more now John Healey poised to raise taxes on banks in budget The International Monetary Fund has urged John Healey to target savings on pensions and welfare, instead of taxing Britain’s banks at the budget later this month. Helge Berger, deputy director of the IMF’s European…
The International Monetary Fund has advised Chancellor John Healey to focus on cutting costs related to pensions and welfare rather than levying additional taxes on British banks, according to deputy director Helge Berger. Speaking from Bangkok during the IMF's annual meeting, Berger suggested that given the UK's high tax-to-GDP ratio, reforming property taxes or VAT could be more effective ways to generate revenue.
He added that balancing fiscal measures with spending cuts would be prudent. Berger emphasized that since Britain's tax burden already reaches 40% of GDP, the focus should be on balancing measures through spending adjustments. He specifically referenced the pensions triple lock, a Labour policy under review, and advocated for better targeting of social benefits, rather than raising taxes on banks.
The IMF's warning comes as bankers warn of potential job losses and reduced lending if taxes increase, citing the banks' critical role in the economy and the risk of job losses and operations shifting abroad. Meanwhile, banking lobby groups argue that higher taxes could force banks to cut lending, leading to a £1.2bn loss in annual UK GDP by 2029-30 and a £10.4bn decrease in business loans and mortgages.
Despite this, TUC analysis reveals the government has already lost £6bn in corporate tax since the bank surcharge was reduced in 2023, while banks have reported record profits.
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