Legal & General chief executive Nigel Wilson has warned banks will be forced to base themselves overseas if the bank levy continues to rise.
The Telegraph reports that Wilson is concerned that the future government needs to focus on the productivity of banks, rather continuing the current “bank bashing” going on today.
He said: “London is a great city and we want to increase our share of financial services, but we need to be careful. Royal Bank of Scotland is shrinking its footprint, as is Lloyds; TSB is about to be taken over. The premier league American banks feel they need to be large to compete in the long term with the Chinese.”
Wilson goes on to say there should have been more in the Budget to encourage investment by institutions.
He added: “Companies and the Government are underinvesting. Bank bashing has a perennial political attraction, but incentivising companies, including banks, to deploy stockpiled cash productively would have a far more positive effect on the economy than repeatedly going back to the well to extract funds through the bank levy.”
Wilson described the levy as “a move which ultimately risks forcing banks to relocate outside the UK.”
Last week in his Budget speech, Chancellor George Osborne said the UK banking levy would increase from 0.156 per cent to 0.21 per cent, which is expected to raise an extra £5.3bn over the next parliament.