HSBC boss says Rachel Reeves putting up bank taxes would harm UK growth
The boss of HSBC has joined a growing chorus of bankers cautioning Rachel Reeves against increasing taxes on banks in her autumn budget, warning it risked “eroding” investment and ultimately harming UK growth.Georges Elhedery, its chief executive, said banks in the UK were already subject to the highest level of taxes on profits compared with other sectors, and paid more than in most other countries.He said placing further financial pressures on lenders could spell trouble for the UK economy.“Additional taxation on banks does run the risk of eroding our continued investment capacity in the business and in supporting our customers, and ultimately in delivering growth for the UK,” he said on Wednesday, as the bank revealed a 29% drop in second-quarter profits.The intervention comes amid growing speculation that Reeves could use her autumn budget to announce a fresh round of tax rises, as forecasts for public finances worsen.
While UK banks have so far dodged an increase in sector-specific levies, a leaked memo by the deputy prime minister, Angela Rayner, in May urged the chancellor to consider a series of wealth taxes, including increasing the corporation tax rate on banks.Banks currently face the 25% headline rate of corporate tax, as well as a 3% bank surcharge and a further bank levy, which is a charge on a portion of balance sheet assets.Estimates by the lobby group UK Finance and the accountancy firm PwC suggest that, when also accounting for employment taxes and VAT, banks in the UK are paying a total tax rate of about 45.8%.That compares with 38.
6% in Frankfurt and 27.9% in New York.Elhedery’s comments come days after the chief executive of Lloyds Banking Group, Charlie Nunn, warned that higher taxes on the banking sector could damage Labour’s plan to see the City drive an economic recovery, and “wouldn’t be consistent” with the chancellor’s messaging to date, as the government pushes to reboot growth.Financial services were among the eight sectors that received government banking in the Labour government’s industrial strategy, with the chancellor subsequently announcing a number of changes to slash regulation and increase growth across the sector.However, Elhedery said HSBC was “positive about the outlook” for the UK, which had “demonstrated strong resilience over the last few years”.
He said: “We continue to see strong resilience across credit outlook indicators and obviously across matters such as employment, the reduction of inflation, all of which give us significant room to be more optimistic about the outlook,”Elhedery also highlighted the “pace” at which the UK had struck a number of free trade agreements, including with the US, EU and India,“Frankly, UK-India is one of our most vibrant corridors, and we’re really looking forward to supporting our clients [to] realise the full benefits of this FTA,”However, his comments came as HSBC revealed a worse-than-expected drop in profits between April and June as its exposure to a struggling Chinese bank and Hong Kong’s troubled commercial real estate sector took its toll,Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe London-headquartered bank, which makes the bulk of its profits in Asia, said it took a $2.
1bn (£1.6bn) paper loss related to its stake in China’s fifth largest lender, Bank of Communications (BoCom).The investment was diluted by a recapitalisation plan meant to offset the effects of a sluggish Chinese economy and struggling property sector.It is the second charge the bank has taken over BoCom, with the ripple effects of China’s property downturn resulting in a $3.1bn hit last year.
HSBC also took a $400m charge related to “challenging market conditions” in Hong Kong’s commercial real estate sector, as the bank tried to cushion the blow of potential defaults across the industry, with “the oversupply of nonresidential properties putting continued downward pressure on rental and capital values”,Together, the impairment charges pushed down HSBC’s pre-tax profits 29% to $6,3bn in the three months to the end of June, compared with £8,9bn during the same quarter last year,However, the bank still announced further payouts to shareholders, as it focused on the strength of the bank outside the one-off hits that dragged down earnings.
That includes a dividend of 10 cents a share and a share buyback of up to $3bn, which is expected to take place before the time it announces third-quarter results at the end of October.
UK online safety law leads to 5m extra age checks a day for pornography sites
Five million extra online age checks a day are being carried out in the UK since the introduction of age-gating for pornography sites, according to new data.The Age Verification Providers Association (AVPA) said there had been a sharp increase in additional age checks in the UK since Friday, when age verification became mandatory for accessing pornography under the Online Safety Act.“As a result of new codes under the Online Safety Act coming into force on Friday, we have seen an additional 5m age checks on a daily basis, as UK-based internet users seek to access sites that are age-restricted,” said Iain Corby, the executive director of the AVPA.The UK has also seen a surge in popularity of virtual private networks, which obscure a user’s real location and thus allow them to access sites blocked in their own country. Four of the top five free apps on the Apple download store in the UK are VPN apps, with Proton, the most popular, reporting a 1,800% increase in downloads
People in the UK: have you been the victim of phone theft recently?
According to data compiled by an insurance firm, nearly two in every five mobile phones stolen in Europe are taken in the UK. Claims made to the American insurance company SquareTrade showed 39% of all phone thefts across the company’s 12 European markets were in Britain.The data revealed that phone theft claims in the UK had increased by 425% since June 2021 and 42% of phone thefts in the UK occurred in London.We’d like to hear from people who have been the victim of phone theft in the UK in the last six months? Has your phone been snatched out of your hands? What happened next and how easy was it to secure your data and accounts? Did you report it to the police? Has it changed your behaviour using your phone or sense of safety on the streets? Why do you think that the UK is the phone theft capital of Europe.You can tell us if you have been the victim of phone theft in the UK by filling in the form below
UK viewers: are you watching YouTube on your TV more than other channels?
YouTube has become popular to watch on TV with children and older people choosing the video platform when they first switch on their televisions.Viewers aged 55 and over watched almost twice as much YouTube than they did in 2023, with 42% of them watching on a TV. The platform is also the most popular first TV destination for generation Alpha viewers, aged four to 15.We’d like to hear from people who watch YouTube on their TV more than other channels. When and why did your watching habits change and how does it differ to what you grew up with? What are your favourite YouTube shows and why?You can tell us why you watch YouTube more than other broadcast channels on your TV by filling in the form below
Samsung Galaxy Z Flip 7 review: great-looking and fun, but iterative Android
Samsung’s seventh-generation Flip phone trims the fat, gains a bigger cover screen on the outside and a larger folding display on the inside, but fundamentally doesn’t reinvent the wheel.The Guardian’s journalism is independent. We will earn a commission if you buy something through an affiliate link. Learn more.The Galaxy Z Flip 7 joins the book-style Z Fold 7 as Samsung’s two flagship folding phones for 2025
YouTube most popular first TV destination for children, Ofcom finds
Children are now heading to YouTube from the moment they turn on the television, in the latest sign of the video platform’s migration from the laptop to the living room.YouTube is the most popular first TV destination for generation Alpha, according to a comprehensive survey of the UK’s viewing habits by Ofcom, the communications regulator.One in five young TV viewers aged from four to 15 turned straight to the platform last year. The survey showed Netflix close behind. While BBC One was in the top five first destinations, children were just as likely to choose BBC iPlayer
The trillion-dollar AI arms race is here
Hello, and welcome to TechScape. Johana Bhuiyan and Dara Kerr here, filling in for Blake Montgomery, who’s enjoying the beach but likely getting sunburned.Tech companies are fighting to claim the title of having the world’s most advanced AI. The goal is to supercharge their bottom line and keep investors and Wall Street happy. But developing the world’s most advanced AI means spending billions on data centers and other physical infrastructure to house and power the supercomputers needed for AI
Shell profits down nearly a third after drop in gas prices
Co-op expands its ‘food on the go’ offering with 15 new bitesize stores
Queensland Productivity Commission argues construction industry ‘reset’ needed to fix housing crisis and deliver Olympics
Tax rises in autumn would force our prices up, retailers tell Reeves
Labour says firms will be penalised for late payments to suppliers
Divided Fed leaves interest rates unchanged despite Trump pressure