Banks sat among the FTSE 100’s biggest fallers on Wednesday as speculation built that they could foot a rise in taxes hinted at by the Prime Minister.
NatWest Group PLC (LSE:NWG) dropped 3.4% throughout the day, while Barclays PLC (LSE:BARC) and Lloyds Banking Group PLC (LSE:LLOY) fell by 2.6% and 1.5% respectively.
This follows Keir Starmer’s speech on Tuesday, where he alluded to tax hikes in the Autumn Budget to fill a £22 billion “black hole” in public finances.
He had said the October budget would be “painful,” adding those “with the broadest shoulders should bear the heaviest burden”.
This has prompted speculation that banks could be the target of tax hikes, with a former senior Whitehall adviser suggesting the move to the Financial Times.
“There are banks who’ve been making good profits out of higher interest rates,” they said.
“They’ve got broad shoulders and no one likes banks.”
Banks have benefitted from a rise in interest rates in recent years, including NatWest, Barclays, Lloyds and Santander from deposits held at the Bank of England.
According to data from the House of Commons Treasury Select Committee, the four alone saw interest earnings on such deposits jump 135% to over £9 billion last year.