JP Morgan chief Jamie Dimon has threatened to withdraw a major investment from the UK if the Labour government adopts policies that are 'hostile to banks'. The influential American banker revealed plans last year for a £3bn tower in Canary Wharf, projected to inject up to £10bn into the local economy over six years.
Dimon's Warning
In an interview with Bloomberg TV, Dimon was asked whether the plans would be reviewed amid recent Westminster upheaval that rattled bond markets. 'Not political instability but if they become hostile to banks again, yes,' Dimon said. He added: 'I've always objected to the fact, we didn't damage the UK in any way, we paid probably $10bn in extra taxes by now. I don't think that's right or fair. If that happens too much we will reconsider.'
Tax Disparity
Industry bosses have raised concerns over the outsized tax rate on lenders in London compared to overseas counterparts. London's total tax rate for the banking sector was 46.4 per cent last year, well above Amsterdam (42.2 per cent), Frankfurt (38.9 per cent), Dublin (28.9 per cent) and New York (27.9 per cent). The sector paid around £43.3bn in tax, making up 4.3 per cent of total receipts, according to UK Finance.
Market Turmoil
Borrowing costs hit their highest since 1998 yesterday as fears of a lurch to the left intensified. A left-wing group of Labour MPs targeted the government's fiscal rules, claiming they 'resolved in favour of caution'. The paper also called for heavier taxation on wealth and rewarding work. Should Prime Minister Starmer be forced out, likely successors are expected to have a less welcoming view of the banking sector.
Bank Stock Sell-off
The UK's banking giants led a major sell-off across the FTSE 100 on Tuesday morning, driven by the political sentiment. Lloyds and Natwest both upgraded their income expectations for the year ahead as interest rates remain elevated due to the Iran war. This has sparked renewed tax speculation, with analysts viewing the sector as 'ripe for a tax grab'. Last year, former deputy Prime Minister Angela Rayner called for higher taxes on banking to curb welfare spending cuts. The left-wing Labour figure is seen as a top candidate to succeed Starmer or play a key role in future governments.
