UK Treasury officials are weighing fresh windfall taxes on oil companies and banks as Chancellor John Healey looks to rebuild fiscal headroom before the October Budget. The move follows large profits at both sectors, but bank and industry leaders are already pushing back, warning of damage to the UK's competitiveness.
Treasury officials reportedly see additional levies on oil firms and banks as an easy way to raise revenue, according to a Bloomberg report. Healey is considering the plan as bosses in both sectors have posted large profits.
Treasury eyes fresh levies
The Chancellor needs to rebuild a partly eroded £22.7bn fiscal buffer while funding defence commitments and cost-of-living pledges. He must find an extra £4.7bn in revenue over four years for the defence investment plan, alongside another £10bn in departmental cuts. The Resolution Foundation believes the buffer could be as low as £8bn, a narrow margin that would leave public finances more exposed to shocks from higher energy prices.
Citigroup boss Dame Jane Fraser has already warned Healey against a new banking tax, while UK Finance officials have written to the Chancellor to flag the risks to the financial services sector. Barclays economist Jack Meaning expects the fiscal statement to represent "continuity" from Rachel Reeves, with Healey likely leaning on reallocating budgets across departments.
Pay deals add to the pressure
New public sector pay settlements are adding to the squeeze. Andy Burnham has agreed to give Avanti train drivers, represented by the Aslef union, a pay rise of around 3.6%. Drivers on the east coast operator LNER could meanwhile get a 12% pay rise over four years, reports suggested.
City economists do not expect the Budget on 28 October to break far from the previous government's economic plans, with vast expansions in public spending or further borrowing not expected. A Treasury spokesperson said the Office for Budget Responsibility will publish its updated forecast alongside the Budget, and that it would not comment on rumour or speculation about its contents before then.
Source: Oilprice.com
Trading involves risk.
Risk Disclaimer
