UK government threatens more taxes for banking arena
The UK government has today issued a surprise statement suggesting that the £2.5 billion tax levy introduced to the banking arena at the last budget could be doubled if UK banks continue to pay out large bonuses and refuse to increase liquidity in the money markets. Whether or not the UK government will have the bottle to push ahead with another hike in taxes for the UK financial sector, still the engine room of the UK economy, remains to be seen but the threats have been issued and the banking arena would do well to take heed.
Successive governments have put very different strategies into play in relation to the banking arena and its swift recovery from the doldrums of the recession. However, unfortunately none of these strategies have as yet worked because banking employees continue to attract large bonuses and profitability has bounced back from the dark days. When you also consider that the UK government has significant stakes in Royal Bank of Scotland and Lloyds Bank, it is a bit of a mystery as to why they have been unable to exert any more pressure.
Whether or not this new strategy will be successful is open to debate but there is no doubt that the UK financial arena is still the tail that is wagging the dog.
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