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Tuesday, February 08, 2011

Coalition turns the screws on the banks

This morning's news that the Chancellor of the Excchequer is to increase the levy on bank profits to £2.5bn this year, raising an extra £800m, and will be making it permanent is very welcome. It shows that the Government have recognised that bankers had a role in creating this crisis and should be contributing towards putting it right.

George Osborne said that the move will show lenders that he was acting in "good faith" in slow-moving negotiations aimed at forcing banks to curb bonuses and increase loans to small businesses:

"We want more lending, [banks] to pay more tax, make a bigger contribution to our society and pay less bonuses next year."

When combined with the Government Commission on the future of the banks this announcement demonstrates a determination at the highest level to get things right for the economy and to avoid repeating the circumstances, where unregulated banks were able to damage our economic future.

The Government's approach to this issue is already starting to pay dividends with today's Independent reporting that Ministers and bank chiefs are edging towards a deal under which the City will pump £1.3bn into areas hardest hit by the downturn.
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