Barclays boss warns Reeves over business tax risks for UK growth

The chief executive of Barclays has cautioned Chancellor Rachel Reeves against increasing taxes on British businesses, arguing that such measures could undermine ambitions to boost the UK’s economic growth. CS Venkatakrishnan delivered a pointed warning that any moves to raise taxes for major banks and other vital growth sectors like pharmaceuticals and biotech could put a brake on the country’s recovery efforts.

Concerns about the possibility of a fresh tax on banks have surged after a leaked government memo suggested reviewing the corporation tax rate paid by Britain’s largest lenders. Despite calls for higher corporate taxes, Venkatakrishnan insisted that targeting banks—the country’s biggest taxpayers—would be detrimental. “If growth is the primary objective for the UK, higher taxation of businesses is not a path towards that growth,” he remarked. He emphasised the importance of supporting all major sectors, including technology and finance, as collective prosperity underpins national progress.

His comments came against a background of mounting pressure on public finances. The Office for Budget Responsibility has repeatedly flagged the country’s public spending plans as unsustainable, fuelling speculation that Reeves might unveil additional bank taxes in the upcoming autumn Budget. Lenders are already liable for multiple levies including standard corporation tax, the bank surcharge and the bank levy, with UK Finance reporting an industry tax contribution of £10.8bn last year and the highest global average tax rate in the sector.

Barclays posted strong financial performance in its latest half-year results, reporting a 28 per cent increase in pre-tax profits to £2.5bn in the second quarter of 2025. The bank’s trading division benefited from market fluctuations caused by Donald Trump’s tariff policies, and shareholders saw improved returns through a new £1bn share buyback scheme alongside a 3p per share dividend worth £400m. These initiatives raised shareholder payouts by 21 per cent compared to the first half of 2024.

The acquisition of Tesco Bank in October 2024 also contributed to Barclays’ robust position, delivering £350m in cost savings in the first half of this year. Venkatakrishnan reaffirmed commitment to the bank’s three-year transformation, which targets £2bn in savings primarily through workforce reductions, and aims to return £10bn to shareholders during that period. Barclays, now the UK’s second largest bank, is driving structural reforms for more consistent and sustainable returns.

Industry leaders continue to caution the government against policies that may deter investment and weaken core sectors. As the debate over corporate taxation gathers pace, the future trajectory of UK growth will depend on striking a delicate balance between fiscal responsibility and fostering a dynamic, enterprising economy.