“Markets have already welcomed the modesty of the 3% temporary surcharge being placed on UK banks. Whilst the ambition is to tax the banks to support households with cost of living demands, banks and lenders will have to manage this additional cost, with potential implications for the price and availability of credit.
“If the cost of this is passed on to consumers they will likely feel an impact at a time when many have little financial wiggle room left.
“Mid-sized and specialist banks will possibly feel this most, with fewer options to manage the impact than larger, more diversified lenders. Where retained profits are important to building the capital that supports lending, a higher tax bill, even though modest, could leave less immediate capacity to grow lending to households and businesses, particularly in the tough economic environment.”
