Lloyds chief sounds alarm over tax hikes - as latest figures show economy slowing and unemployment rising
Charlie Nunn, chief executive of Lloyds Banking Group, said increasing taxes on banks 'wouldn't be consistent' with helping them boost the economy.
Nunn pointed to the Chancellor's acknowledgment of a 'stronger economy needing a strong financial services sector' and the role for banks in supporting households, businesses and foreign investment in the UK to 'get us on a faster growth trajectory'.
'We definitely think that's an important thing to focus on and therefore wouldn't be consistent with tax rises,' Nunn said.
He said Britain already had the highest taxes on the financial services sector of any major economy.
'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,' Nunn added.
It came as a monthly purchasing managers' index survey (PMI) pointed to 'sluggish' private sector activity, suggesting the economy is on course for quarterly growth of just 0.1 per cent.
The survey's 'flash' reading for July of 51 was down from 52 in June – where the 50-mark separates growth from contraction.
It also revealed that employers have stepped up the pace of job cuts to the fastest since February.
The performance is largely blamed on the Chancellor's £25billion employer national insurance raid and global uncertainty, the survey found.
Yet speculation is growing that Reeves will raise taxes this autumn as slowing growth, U-turns on spending cuts and higher borrowing costs make it harder for the sums to add up.
Lloyds has altered its economic outlook for the UK, upgrading its growth forecast for the year from 0.8 per cent to 1 per cent. It predicts 1pc growth for 2026 – from a previous forecast of 1.4 per cent.
On unemployment, a jobless rate of 4.8 per cent is predicted for this year – up from 4.7 per cent – and 5 per cent next year – up from 4.8 per cent.
However, Nunn said households and businesses were 'improving their financial health'.
He added: 'On a relative basis to other economies, the UK's in an OK place. It's obviously been impacted by the uncertainty in the tariffs going on globally.'
The group, which also owns Halifax and Bank of Scotland, reported a better-than-expected 5 per cent rise in first-half profits to £3.5billion.
He also welcomed plans to loosen red tape, after the Chancellor described regulation as a 'boot on the neck of businesses'.
Storm clouds gather
Consumer confidence has fallen as households sense 'stormy conditions ahead'.
A monthly reading of sentiment from market researchers GfK fell to minus 19 from minus 18 in June.
Neil Bellamy, its consumer insights director, said 'many will conclude consumers are in a cautious wait-and-see mood' but some may be more anxious.
'With speculation growing over possible tax rises in the Budget and price pressure contributing not just to higher inflation but also to the likelihood of worse inflation to come, the news is worrying,' he added.
A rise in savings to its highest level since November 2007, 'does indeed suggest people are anxious', he said.
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