The boss of Goldman Sachs has warned Chancellor Rachel Reeves that an increase to the financial burden slapped on the banking sector would dent economic growth ambitions.
In a private meeting with the Chancellor, David Solomon said hitting the industry with higher taxes would dampen wider prospects for the country’s growth.
The remarks come ahead of Reeves delivering her second Autumn Budget on 26 November, where she is expected to raise taxes to the tune of near £30bn as she looks to rebuild her shattered fiscal headroom.
According to Goldman’s latest earnings report, the bank paid $529m (£398m) in corporation tax in the UK last year.
Solomon’s meeting with Reeves, as reported by Sky News, comes as speculation mounts that she will use the banks for an easy – and politically safe – cash grab, in order to strum up funds for the public purse.
Economists said last month banks were expected to “bear the brunt of higher taxes”.
Bank bosses sound alarm on taxes
UK banks are subject to a surcharge levy, which sits on top of coproration tax.
The surcharge stands at three per cent after being lowered by the Conservative government. However, earlier this year, ex-Deputy Prime Minister Angela Rayner floated the idea of raising the surcharge to five per cent.
Solomon joins a chorus of banking chiefs in sounding the alarm on an increase to the tax burden.
Georges Elhedery, HSBC’s chief executive, said in July any further financial pressures on lenders could spark trouble for the UK economy.
“Additional taxation on banks runs the risk of eroding our continued investment capacity in the business and in supporting our customers, and ultimately in delivering growth for the UK,” Elhedery argued.
Paul Thwaite, NatWest’s chief executive, said “strong economies need strong banks” as he argued he would rather use the bank’s capital for loans to boost growth “for the good of the country”.
The industry has also raised issue with the outsized rate slapped upon UK firms compared to their counterparts overseas.
The sector’s total rate in 2024 sat at 45.8 per cent, dwarfing European rivals Amsterdam (42 per cent), Frankfurt (38.6 per cent) and Dublin (28.8 per cent), according to a report UK Finance submitted ahead of the 2024 Autumn Budget.