Jamie Dimon’s bank tax warning to Chancellor John Healey has thrust the debate over levies on UK lenders into the open, with the JP Morgan chief telling Healey that higher taxes drive finance jobs to lower-cost cities ahead of a Budget due on 28 October.
The call, which took place on Thursday at the request of the Chancellor’s team, saw Dimon emphasise ‘getting public policy right’ as central to solving economic problems, according to City AM. A person close to the exchange said taxes came up ‘in general’ but ‘not specific’ to the UK or to JP Morgan’s plans for a new Canary Wharf headquarters. The conversation is one of several the Chancellor is expected to hold with industry peers in the coming week.
Jamie Dimon’s Bank Tax Warning: The Jobs Argument
Dimon pointed to a decline in finance roles in New York, which he attributed to the tax burden there, according to the Financial Times. The argument will resonate with those watching London’s competitiveness: Dame Jane Fraser, who heads up Citigroup, said earlier this month that she was ‘concerned’ about a fresh charge on UK banks. ‘Money votes with its feet,’ Fraser said, citing a 48 per cent effective tax rate on UK banks against 27 per cent in New York and 28 per cent in Dublin.
Dimon, who commands a pay package of $43m and has led Wall Street’s biggest bank since 2006, has form on this issue. He warned in July that a tax on the sector would have ‘adverse consequences’, and said in May the company would pull its £3bn Canary Wharf investment if the government became ‘hostile’ to banks. City AM has previously reported that a government hold-up over the business rates exemption for JP Morgan’s proposed new tower had complicated the process, with the firm hoping for a 100 per cent exemption.
The Surcharge at the Centre of the Row
At the heart of the pressure campaign is the three per cent banking surcharge, which sits on top of corporation tax and applies to profits above £100m. The surcharge was cut from 8% to 3% by the Conservative government in 2023, according to The Guardian. In its current form, the levy raised £1 billion for the Treasury in 2024–25, according to the Financial Post.
Campaigners want that figure raised substantially. The TUC has argued that increasing the surcharge back to 8% would generate an extra £9 billion over four years, while pushing it to 16% would deliver £24 billion, according to The Guardian. One activist group has floated a separate £19bn windfall tax on Natwest, Lloyds, Barclays and HSBC alone. The four banks made profits of almost £46bn last year, The Guardian reported, a figure that has sharpened the appetite on the left for a larger share.
Neither Andy Burnham nor Healey has indicated any view on whether the surcharge will rise or whether a separate windfall tax is on the table. The Treasury’s response to the row was carefully non-committal: ‘The Chancellor meets with senior representatives from sectors across the economy on a regular basis, including the financial services sector.’ JP Morgan declined to comment.
Budget Pressures Shaping the Debate
The calls between bank chiefs and the Chancellor are taking place against a backdrop of genuine fiscal strain. Some economists have warned the Burnham government will need to raise up to £25bn in the Budget to meet spending commitments on defence and social care. Ruth Gregory, deputy chief economist at Capital Economics, said the next ‘tax-raising Budget could be almost as big as the last,’ referring to former Chancellor Rachel Reeves’s £26bn tax package.
Dimon’s Jamie Dimon bank tax warning is the most prominent intervention so far, but it is unlikely to be the last. With the 28 October Budget now weeks away, Healey will face calls from left-wing campaigners and fiscal hawks pulling in opposite directions: one side citing bank profits, the other warning that London’s status as a financial centre is not as entrenched as it once was.
