JP Morgan chief threatens to pull £3bn investment if Labour becomes ‘hostile to banks’
The chief executive of JP Morgan has threatened to pull a major investment from the UK if Labour government policy turns “hostile to banks”.
Jamie Dimon – the influential American banker – revealed plans for a £3bn square feet tower in Canary Wharf last year, which is projected to inject as much as £10bn over the next six years into the local economy.
But in an interview with Bloomberg TV, Dimon was asked whether the plans would be reviewed in light of the upheaval in Westminster over the last week that has sent jitters across the bond market.
“Not political instability but if they become hostile to banks again, yes,” Dimon said.
He added: “I’ve always objected to the fact, we didn’t damage the UK in any way, we paid probably $10bn [£7.4bn] in extra taxes by now. I don’t think that’s right or fair. If that happens too much we will reconsider.”
Industry bosses have raised issue with the outsized tax rate slapped on lenders in London compared with their counterparts overseas.
London’s total tax rate for the banking sector came in at at 46.4 per cent in the last year, sitting well above Amsterdam (42.2 per cent), Frankfurt (38.9 per cent), Dublin (28.9 per cent) and New York (27.9 per cent). Last year, the sector paid around £43.3bn in tax, according to UK Finance, making up around 4.3 per cent of total receipts.
Markets rattled by the Labour left
Borrowing costs hit the highest since 1998 yesterday as fears of a lurch to the left ramped up. As markets opened a group left-wing group of Labour MPs took aim at the government’s fiscal rules, with a policy paper claiming they “resolved in favour of caution”.
The paper also called on the government to tax wealth more heavily and to reward work.
Should Starmer be forced out of his role, likely candidates to succeed him and Chancellor Rachel Reeves are expected to have a less welcoming view of the banking sector.
The UK’s banking giants led a major sell-off across the FTSE 100 on Tuesday morning, driven by that sentiment.
Lloyds and Natwest have both upgraded their income expectations for the year ahead as interest rates are expected to remain elevated as a result of the Iran war. This has led to renewed chatter around tax speculation with analysts viewing the sector as “ripe for a tax grab”.
Last year, former deputy Prime Minister Angela Rayner made a dramatic intervention where she called for taxes to be raised on the banking sector in a bid to curb a cut to welfare spending. The left wing darling of the Labour party is being viewed as a top candidate to succeed Starmer or play a fundamental role in future governments.
The comments bring another round of uncertainty to the hopes of the JP Morgan tower.
The bank has continued to warn the skyscraper would only go ahead should the government maintain a favourable tax environment.
A report from Tower Hamlets local council revealed JP Morgan had lobbied for a “business rates incentive over a period of years”.
The government has also warned the local authority that the bank was “unlikely to progress” on the new tower “without clarity and certainty” on its tax bill.