The boss of Lloyds has warned Rachel Reeves against raising bank taxes in her autumn Budget, saying it would be at odds with the Government’s plans to drive economic growth.
It comes as the banking giant revealed its earnings beat expectations for the first half of 2025, with both customer lending and savings balances growing.
Charlie Nunn, the group’s chief executive, said raising taxes on banks is a “political decision” and the group has had “no engagement” with the Government about it.
But he highlighted the Chancellor’s Mansion House speech last week where she told of “the need for a stronger economy and needing a strong financial services sector”.
Mr Nunn said: “We therefore believe that’s the important thing to focus on and obviously, therefore, wouldn’t be consistent with tax rises.”
Ms Reeves is facing pressure over the UK’s public finances following higher-than-expected Government borrowing figures last month, raising some expectations that she could hike taxes in her autumn Budget.
Mr Nunn added: “We already have the highest tax regime on the financial services sector of any major economy… we’re completely comfortable with that.
“But it is important when you look at the competitiveness of the City of London and the financial services sector that we remain a competitive tax regime.”
The bank boss also welcomed Ms Reeves’s plans to loosen regulation in the sector, which she described as a “boot on the neck of businesses” in many areas.
Referring to rules around retail investment, Mr Nunn said: “We really believe that regulation over the last 15 years has constrained our ability to provide advice to those that most need it.”
He also said “now is the right time” to look at potentially scrapping the bank ring-fencing regime, which requires banks to separate their retail from their investment banking activities.
Ms Reeves announced plans to reform the system as part of wider measures.
Meanwhile, the banking group – which incorporates Lloyds Bank, Halifax and Bank of Scotland – reported a pre-tax profit of £3.5 billion for the first six months of the year.
This was 5% higher than a year ago, and ahead of the £3.2 billion that analysts had been expecting.
Lloyds said total lending to customers increased by £11.9 billion over the period, or 3%, driven by UK mortgages with some 33,000 first-time buyers borrowing on a home.
Customer deposits also grew by £11.2 billion, or 2%, following a strong season for ISAs, while more people moved money out of current accounts and into savings.
Higher levels of saving partly reflected consumers trying to lock in higher savings rates before they come down, Mr Nunn said.
But it also comes off the back of wage growth, and many people choosing to save surplus cash rather than spending more on nonessential items.
“There’s still obviously customers who are really actively managing their finances and who are struggling to make ends meet,” he said.
“But year-on-year, all of those stats are looking slightly healthier, less people are worried a little bit about what’s going on, and less people are looking to shop around.”
He said those factors could lead to a “more positive outlook than we’re currently forecasting”.
Economic forecasts from the bank show a “modest deterioration” in the outlook, with gross domestic product (GDP) growing more slowly than previously thought.
It also predicts the UK’s unemployment rate rising to peak at 5% next year.
