The head of Goldman Sachs has advised Rachel Reeves against imposing additional financial pressure on the banking sector, amidst concerns within the industry that it may face substantial tax increases in the upcoming budget. According to Sky News, David Solomon expressed this warning during a private meeting with the chancellor last week, emphasizing that higher taxes on banks could negatively impact the broader economic growth of Britain.
This meeting took place seven weeks before a critical budget for the Labour government, which is working to address a fiscal gap estimated between £20bn and £30bn. In their most recent annual earnings report, Goldman Sachs revealed that they paid over $529m in corporation tax in the UK last year. They reported profits of nearly $4.3bn on revenues of $10.7bn in Britain in 2024, with approximately 3,500 employees in the country.
Due to its size, Goldman is subject to the UK Bank Levy, a tax on its British assets and liabilities. Additionally, they pay a 3% corporation tax surcharge imposed on banks that earn profits exceeding £100m. The surcharge was initially set at 8% in 2016 before being reduced to 3% seven years later. Recent lobbying efforts by major UK and international banks have aimed to prevent a reversal of this reduction.
The banking industry faces the possibility of increased taxes next month due to the significant fiscal challenges that Ms. Reeves is confronting, coupled with the sector’s substantial profits since the 2008 financial crisis. Solomon’s appeal to the chancellor is not the first instance this year where he has highlighted the implications of a growing tax burden in the UK.
In an interview earlier this year with Sky News presenter Wilfred Frost, Solomon expressed concerns about London’s standing as a leading financial center, calling it «fragile.» He emphasized that London remains crucial but noted that Brexit and global changes have made talent more mobile. Solomon stressed the importance of policies and incentives in retaining talent and fostering capital formation.
The Treasury did not provide an official statement on the discussion between Ms. Reeves and Mr. Solomon. However, they mentioned that Jamie Dimon, the Chairman and CEO of JP Morgan, had previously praised financial services sector reforms in the UK. Both Goldman Sachs and the Treasury declined to offer further comments.
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