BARCLAYS WARNS AGAINST WINDFALL TAX ON BANKS

Barclays has warned the government against imposing a windfall tax on lenders, citing concerns over lending capacity and economic growth. Chief executive CS Venkatakrishnan made the statement following the bank's half-year results, which showed profits rising 17 per cent to £6.1 billion. The warning follows Prime Minister Andy Burnham's announcement of plans to increase spending on defence, social care and cost-of-living support, which has prompted discussion of new levies on the financial sector. Venkatakrishnan told reporters that banks already face the highest tax rates globally, with UK lenders paying a 3 per cent surcharge above the standard 25 per cent corporation tax rate.

Venkatakrishnan stated that "for every £1 of capital we have, we lend £8 to £10" to businesses and households, and suggested redirecting capital toward investment rather than taxation. Finance director Anna Cross highlighted the banking sector's track record in supporting UK economic growth. The bank's half-year results were boosted by equity trading revenues, which rose 45 per cent in the second quarter, though this trailed Wall Street competitors which increased an average of 69 per cent following the SpaceX initial public offering. Barclays also increased its potential bonus pool from £1 billion to £1.3 billion.

The warning from Barclays joins similar statements from other bank executives. Ana Botin, chief executive of Santander, recently questioned why banks should be "singled out" for taxation, whilst JP Morgan boss Jamie Dimon cautioned that higher taxes could threaten the lender's £10 billion Canary Wharf development plans. Chancellor John Healey met with bank bosses last week to discuss government growth plans, though the government has neither ruled out nor confirmed plans for additional bank taxation ahead of the budget.