The chief executive of Barclays has warned the government against pushing up public sector pay or raising further taxes on banks as chancellor Rachel Reeves searches for ways to plug a looming fiscal gap.
CS Venkatakrishnan said curbing government spending and tackling wage-driven inflation should be priorities as ministers prepare the November budget.
Speaking to the Financial Times, Venkatakrishnan said: “We need to curb expenditure at the government level. We need to find a way to curb wage inflation.” While UK wage growth has slowed, public sector pay is still running at an annual rate of 5.7 per cent, compared with 4.8 per cent in the private sector.
The Barclays boss also urged ministers not to treat banks as a tax target. “UK banks are taxed more than banks anywhere else. How much more are you going to squeeze this?” he asked, pointing to an effective total tax rate of 46 per cent on UK lenders last year, compared with 28 per cent in New York and up to 39 per cent in the EU. Barclays alone paid £1.4 billion in tax in 2023, on pre-tax profits of £5.7 billion.
Concerns have grown across the sector that healthy profits, buoyed by higher interest rates, could trigger a fresh windfall levy as Reeves comes under pressure to raise revenues. UK bank shares shed more than £6 billion in value last month after renewed speculation over tax hikes spooked investors. Venkatakrishnan warned that further increases would undermine London’s status as a global financial centre, arguing that “the path to growth does not lie in taxing the sector even more”.
Although Venkatakrishnan has been broadly supportive of the Labour government’s pro-business stance since its election last summer, his intervention highlights tensions as the chancellor balances fiscal consolidation with her pledge to foster growth. Other bank chiefs, including Lloyds’ Charlie Nunn, have also cautioned that higher taxation would be inconsistent with Reeves’ efforts to boost competitiveness and attract investment in the City.
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Barclays chief urges ministers to curb public sector pay and resist bank tax hikes