Key Points
- Barclays CEO says a rise in bank levy will power the sector to chop again on hiring and lending to the U.Okay. economic system.
- C.S. Venkatakrishnan stated London was already taxing the banking sector greater than different main monetary facilities.
- Despite the criticism, the British bank CEO stated the Labour authorities within the U.Okay. was a “‘pro-business government”. “I have felt it since the day they walked in,” he added.
Barclays Chief Executive C.S. Venkatakrishnan criticized a proposal to lift taxes on British banks, warning the “facile and fallacious logic” behind such a transfer would compel the lender to chop again on hiring and cut back lending to the British economic system. Venkatakrishnan stated that additional burdening a sector already dealing with one of many highest tax charges globally will not be a viable resolution to the U.Okay.’s tough fiscal state of affairs. “If I can use big words, it’s a facile and fallacious logic,” the Barclays chief advised CNBC’s Sarah Eisen in a wide-ranging interview Tuesday. “Take the banking sector [in the U.K.], which is already paying a tax rate of 48%, higher than almost any other banking sector.” Contrasting the determine with charges in different main monetary hubs, Venkatakrishnan continued, “New York is like 26%, and even the highest in Europe is like 39%, so adding to that is not a path towards economic growth.” In the U.Okay., banks pay a 3% surcharge on the usual company tax fee, which stands at 25%. The Barclays chief govt, nonetheless, was referring to a wider measure often called the “total tax rate,” which goals to seize your entire tax burden that falls on an organization as a direct price, representing a share of its business income. The figures had been compiled by the consultancy PwC for the commerce foyer UK Finance. The U.Okay. authorities is reportedly contemplating elevating the bank surcharge by as much as 2% in November to assist offset a part of an estimated £20 billion deficit in its annual price range. London finds itself needing to lift taxes or lower spending drastically after an increase in inflation expectations drove up U.Okay. bond yields. The U.Okay. authorities has additionally needed to reverse its coverage on cuts to welfare after political backlash. Robert Woods, chief U.Okay. economist at Panthen Macroeconomics, stated “we estimate that in its forthcoming Budget forecast, the OBR will raise forecast debt-interest costs at the five-year forecast horizon by only [£3 billion]” in a observe to purchasers on September 8. The U.Okay. Treasury didn’t instantly reply to CNBC’s request for remark. Pressed on the direct penalties of an elevated levy, the Barclays chief laid out a stark state of affairs. “We would have to find ways to get greater productivity, pull back on hiring, and actually issue less credit into the U.K. economy,” he stated. The purpose, he defined, is that the bank “wouldn’t have as much capital to reinvest back into the system.” The warning carries vital weight, as Venkatakrishnan famous that the monetary companies trade accounts for 10% of the U.Okay. economic system and serves as a significant supply of export earnings for the nation. London-listed Barclays shares have risen 40% in 2025, and the lender reported a near-record web revenue of about £6 billion ($8.1 billion) within the newest 12-month interval ending June 2025, in keeping with FactSet. Barclays additionally trades in New York. BARC-GB YTD line A ‘pro-business authorities’ Despite his critique of the precise tax proposal, Venkatakrishnan additionally expressed broad confidence within the present authorities’s dealing with of the economic system. He acknowledged that officers need to make tough selections concerning taxation and spending, however described the administration as supportive of corporations. “It is a pro-business government. It is absolutely pro-business. I have felt it since the day they walked in,” he stated, including that the federal government understands the significance of the monetary sector to the nation’s economic system. As a substitute for elevating taxes on banks, Venkatakrishnan urged the federal government to focus its spending on long-term investments designed to reverse a nationwide decline in productiveness. “That spending has to be investment: investment in housing, investment in infrastructure, investment in long-term productivity,” he stated. “And productivity is what’s been declining in the U.K.”