EY Budget reaction: Bank levy - another pressure to reduce their UK balance sheets

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Rod Roman, Tax Partner in Financial services at EY comments on the bank levy:

“The Chancellor has again increased the bank levy; this time the rate of levy has been increased by almost a fifth.  Although he says this offsets the corporate tax rate reduction, that is from the Treasury’s perspective, not the banks.  It will affect different banks differently, as those with losses will not benefit from cuts in corporate tax but will be hurt by the levy increase. The banks will see this rate as another pressure to reduce their UK balance sheets.  Reducing balance sheets means less lending to the real economy.  If the Chancellor is aiming for a 20% corporate tax rate they can only assume he will continue to increase the levy in line with this journey.”