Budget tax hikes for financial sector would be ‘own goal’, says CBI

Further taxes on the UK’s financial sector would be an “own goal”, the boss of the Confederation of British Industry (CBI) is set to warn ahead of the Budget.

Rain Newton-Smith, chief executive of the major business group, will call on Chancellor John Healey to give “business breathing space” in his first Budget in a speech in London on Wednesday.

It comes amid intensifying speculation that the Government will increase the tax rate banks pay on their profits.

Mr Healey is reportedly considering increasing the surcharge on bank profits from 3% to 8%, reversing a tax cut for the sector launched by former chancellor Jeremy Hunt.

Ms Newton-Smith will tell the CBI’s London autumn reception at the British Museum that the Chancellor should support the growth of the city’s financial sector.

“Our financial services may be centred in London but they support more than 650,000 jobs outside the capital,” she will say.

“They add more than £200 billion to our economy every year. They are a great British success story.

“Our financial sector already faces a higher tax burden than other global centres. Adding to that would be an own goal for our competitiveness.”

The trade body boss will also argue that growth comes from “helping struggling sectors, not holding back thriving ones”, pushing for the Chancellor to help encourage more private sector investment.

She will say: “So as we’ve said to the Chancellor, the Budget next week must be about giving business breathing space and backing wealth creation.

“Because breathing space gives businesses room to invest. To hire. To innovate. To make the decisions that drive growth in every postcode.

“That means Government and business being bold on the practical things that decide whether investment happens here or somewhere else.”