Global Banks Warn UK Windfall Tax Will Drive Them Out

London, 22 September 2026 — EBM Newsdesk Analysis — Brad Adams

Global banking executives have warned Chancellor John Healey against a windfall tax on the sector, arguing it would push jobs, capital and investment out of London ahead of his first Budget on 28 October. UK Finance, the industry’s lobby group, told Healey directly that a windfall tax would “ultimately risk undermining the very tax base the government seeks to protect and grow, as well as damaging the UK’s international competitiveness.”

What’s Actually Being Proposed

The pressure runs in both directions. The Trades Union Congress wants the bank surcharge — currently 3%, cut down from 8% by the previous government — reversed, with more aggressive proposals floating rates as high as 16% or 35%, the latter matching the windfall levy once placed on energy firms and potentially raising up to £60bn over four years. TUC general secretary Paul Nowak has made the political case plainly: “Our big four banks in this country are making something like a billion pounds in profits every single week.” The banking sector paid over £43bn in tax last year, equivalent to 4.3% of total UK government tax receipts, according to UK Finance — a figure the industry uses to argue it’s already carrying an outsized share of the load, not dodging it.

The Competitiveness Numbers Banks Are Citing

UK Finance’s own commissioned research, conducted by PwC, puts London’s effective tax rate on bank profits at 46.6%, against lower rates in both Frankfurt and New York. Separate PwC modelling for the industry has found London banks already face higher total tax rates than peers in New York and Dublin, a gap the UK is currently the only major financial centre to widen further by keeping a standalone bank levy on top of its corporation-tax surcharge — a levy introduced in 2011 as part of the post-financial-crisis reform package and never fully unwound. David Postings, UK Finance’s chief executive, has framed the risk in blunt terms: piling further tax onto that base risks “killing the goose that lays the golden eggs,” since banks that shift jobs and capital to lower-tax centres take future tax receipts with them, not just this year’s bill.

Part of a Wider Pattern

This warning doesn’t arrive in isolation. EBM has already tracked roughly 6,000 entrepreneurs leaving Britain over the past two years, taking billions in wealth with them, largely in response to the October 2024 Budget’s capital gains tax rises — with April 2025 alone logging 691 departures, a 79% jump year-on-year. The London Stock Exchange, once the world’s largest by market capitalisation, has fallen to eleventh and seen 88 firms delist in a single year, with the FTSE 100 growing just 6.1% annually over the past decade against 15.5% for the S&P 500. A bank windfall tax would land on top of that trend rather than in a vacuum, at the exact moment Germany has announced plans to cut its own corporation tax rate by a percentage point annually between 2028 and 2032, deliberately positioning itself as the more attractive alternative.

EBM TAKE : Every finance minister eventually faces this same argument, and it’s genuinely difficult to referee: banks make an easy political target because the number is large and identifiable, but capital doesn’t have to stay and be taxed if a rival centre offers a meaningfully better deal. UK Finance’s numbers are self-interested, but they’re not obviously wrong — London already taxes banks more heavily than Frankfurt or New York, and that gap predates this specific proposal. Whatever Healey decides on 28 October, he’s choosing between an immediately defensible number in this year’s Budget and a much harder one to measure: how much of London’s shrinking claim to being a global financial centre this decision quietly costs over the next five.