Britain’s biggest banks lost more than £8billion in value today as rumours swirled that Chancellor Rachel Reeves is planning a tax raid on the sector.
Leading economists have warned the UK could be lurching towards a 1970s-style debt crisis and even an IMF bailout.
Shares across the FTSE 350 tumbled by up to 2.3% in early trading, with jittery investors worried the Treasury is eyeing new levies to plug their £50bn black hole in the nation’s finances.
NatWest was hit hardest, down 5.1%, wiping £2.2bn off its market value in a single day. Barclays and Lloyds slumped 3.7% and 4.2% while HSBC dipped 1.3%.
The City sell-off followed talk that banks could be forced to hand over more profits through a levy on the huge cash piles they keep at the Bank of England.
Market watcher David Morrison at Trade Nation said: “Banking stocks are selling off mainly due to fears Ms Reeves could be preparing a new windfall tax.”
Speculation over fresh tax grabs comes just weeks before the autumn Budget, expected to unleash a raft of revenue-raising measures. Back in May, deputy PM Angela Rayner urged Reeves to hike corporation tax on banks, a change they think will raise up to £4bn a year.
But leading economists have warned the UK could be lurching towards a 1970s-style debt crisis and even an IMF bailout if Labour continue down this path.
