Lloyds boss warns Reeves against tax hikes as it forecasts weaker growth

Daily Mail​

24-07-2025

The boss of Britain's biggest mortgage lender has sounded the alarm over tax rises as it warned of slowing GDP growth and rising unemployment.
Charlie Nunn, chief executive of Lloyds Banking Group, said hiking taxes on banks would be 'inconsistent' with helping lenders in their role of boosting the economy.
Nunn's comments came as the group – which owns Halifax and Bank of Scotland as well as Lloyds Bank – reported a 5 per cent rise in first half profits to £3.5billion.
But the lender also faced questions about the possibility of a tax raid on banks by Chancellor Rachel Reeves in the autumn Budget as slower growth, U-turns on spending cuts, and higher borrowing costs leave her with a gaping financial black hole.
Nunn said tax rises were a 'political decision' and it has had 'no engagement with the government on that or any discussion with them'.
But he pointed to the Chancellor's acknowledgment of a 'stronger economy needing a strong financial services sector' and the role for banks in supporting households and businesses and international investment into the UK to 'get us on a faster growth trajectory'.
'We definitely think that's an important thing to focus on and obviously 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.
Meanwhile, Lloyds altered its economic outlook for the UK, slightly upgrading its growth forecast for this year from 0.8 to 1 per cent. It also predicts 1 per cent growth for 2026 – but that is down from a previous forecast of 1.4 per cent.
And its assumptions on unemployment have also darkened, with a jobless rate of 4.8 per cent predicted for this year – up from 4.7 per cent – and 5 per cent next year – up from 4.8pc.
However, Nunn sounded a positive note on households and businesses which he said were 'improving their financial health' and may now be able to 'move to a higher growth trajectory'.
He added: 'We think there is a chance to do that despite our forecasts today being relatively lower growth. 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.'
Meanwhile, Lloyds like other lenders has been affected by bumpy mortgage lending trends – as buyers raced to beat stamp duty changes saw a surge in lending at the start of the year, resulting in a slower trend in the second quarter.
Finance chief William Chalmers said overall the first half had seen 'meaningful growth' in mortgages.
He said the stamp duty changes had seen deal completions pulled forward into the first quarter but added that June volumes were 'starting to return to normal'.
Meanwhile, speculation of a reduction in the ISA saving limit – which the Chancellor ultimately shied away from – has seen a burst of saving in the tax-free wrappers.
Nunn said: 'Over the last few quarters we've had a few things going on in the economy that's changed behaviours in a way that we haven't seen in the past.
'So obviously, the discussions that the Government was having around ISA limits, we did see a very significant increase in ISAs this year – we saw about a 30 per cent increase in the ISA market.'