George Osborne's decision to increase his annual banking levy was met with a mixture of frustration and resignation in the City.
A hike had been seen as a done deal. The Chancellor said that to hit his target of raising £2.5bn from the banks he would have to up the levy from 0.078 to 0.088 per cent of their total deposits.
Banks cannot yet work out the extra cost as the final figure is based on year-end deposits. But they see it as another cost of doing business in the UK and a sign they remain a political target.
Yesterday was the third time Mr Osborne has hiked up the levy. He tried to sugar the pill by resisting a proposed European tax on every financial transaction.
The taxpayer-backed Royal Bank of Scotland and Lloyds Banking Group have no option but to pay up. Barclays probably will, too.
For HSBC and Standard Chartered – with huge overseas operations – the rise is a further factor in deciding whether to stay in Britain. Both object to the levy as it is charged on non-UK deposits.
Angela Knight, head of the British Bankers' Association, said: "Banks are committed to playing their part in restoring public finances through the many different taxes they pay but a stable tax regime is important.
"Banks of all nationalities do business around the world from here and pay tax here."Reuse content