IMF urges UK chancellor to cut spending instead of taxing banks

The International Monetary Fund has advised the UK government to reduce public spending, particularly on welfare and pensions, rather than imposing new taxes on banks. Guardian Business, The Guardian, The Telegraph, The Independent, The Times, and This is Money all reported on the advice given by the international financial institution to Chancellor John Healey as he prepares his upcoming budget. [1][2][3][4][5][6]

Helge Berger, the deputy director in the IMF's European department, stated during a press conference in Bangkok that there might be better options to balance public finances, according to Guardian Business. The Independent and The Telegraph noted that the IMF cautioned against bank tax increases, with The Guardian and This is Money adding that the IMF suggested targeting pensions or welfare spending as an alternative. [1][2][3][4][6]

The intervention comes amid expectations that the government is considering tax increases on the financial sector. John Healey has served as Chancellor of the Exchequer since 2026 and was previously Secretary of State for Defence, as Wikipedia notes. As FTMQ Business reported earlier, senior banking executives expect higher taxes in the budget, with reports indicating a tax increase could raise 2 billion pounds from banks after the top four UK banks generated about 15 billion pounds in profit in the first half of the year. [7][8]

The proposed tax increases have drawn warnings from industry groups. As FTMQ Business reported earlier, UK Finance warned that additional tax levies on the sector would hurt overall business investment, job creation, and international competitiveness. [8]