UK bank shares slide as Chancellor eyes tax raid in Budget

By 17 October 2026 London bank shares were still unwinding Friday's slide, after the Guardian and Reuters reported that Chancellor John Healey is poised to raise taxes on UK banks in his first Budget on 28 October. The most likely measure would reverse earlier cuts to the bank surcharge, taking it from 3% back to 8% on top of corporation tax — a change analysts at KBW say could bring the Treasury around £2 billion a year but cut lender earnings by about 6%. Lloyds Banking Group led the drop with a 1.8% fall, NatWest declined around 1.5%, and Barclays briefly dipped before recovering, while HSBC and Standard Chartered, which make most of their profits overseas, closed higher. UK banks already operate with a total tax rate above 46% — compared with 38.9% in Frankfurt and about 27% in New York — and industry bodies warn that further rises would hurt competitiveness. The IMF has said raising bank taxes is an option but 'should not be the first choice'.