Jeremy Hunt, the MP for Godalming and Ash and former chancellor of the exchequer, has warned that an increase in the surcharge banks pay on profits above £25 million would be detrimental to the UK economy.

Writing in the Times, Hunt said that higher taxes on banks would damage international investment in the UK and reduce job opportunities. He cited a recent Trades Union Congress report which proposed a surcharge of 35 per cent on profits above £25 million could raise £60 billion over the next four years.

“The problem is that capital is mobile […] a more likely outcome would be less investment, lower growth and fewer jobs,” Hunt wrote, arguing that the knock-on effect of such a move would be lower government incomes.

Hunt referenced a recent PwC report which calculated the total tax rate paid by UK banks as 46.4 per cent. This was the highest among financial centre peers, with 42.2 percent paid in Amsterdam, 38.9 per cent in Frankfurt, 28.9 per cent in Dublin and 27.9 per cent in New York.

Under Hunt, the UK reduced the banking surcharge to three per cent, a substantial reduction on the eight per cent rate introduced under George Osborne in 2016.

The not-for-profit organisation Positive Money has separately suggested that a 38 per cent surcharge on profits above £800 million could raise £18.9 billion in 2026.

Notable figures in the financial sector have openly urged the government against raising the banking surcharge. In July, the JPMorgan Chase (JPMC) chief Jamie Dimon warned of “adverse consequences” if the government sought to tax banks more.

This followed an interview Dimon held with Bloomberg in May, in which he suggested JPMC could step back from plans to construct a £3 billion tower in Canary Wharf should the UK tax regime begin to lean more on banks.

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