Skip to main content
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
// //

People walk through the Canary Wharf financial district of London, on Dec. 7, 2018.

Simon Dawson/Reuters

Britain’s finance ministry is canvassing private bankers over how the country’s richest citizens might help pay for the soaring cost of coronavirus relief packages, with potential tax hikes likely to sit high on the agenda.

Government officials are contacting executives at major banks and wealth management firms to sound them out on options to replenish depleted public coffers, according to one senior banker invited to share their views.

Britain’s emergency public spending surge and tax cuts in response to the pandemic are forecast to cost around £133 billion this financial year and lift its budget deficit to wartime levels, the country’s fiscal watchdog has said.

Story continues below advertisement

The government is weighing whether Britain’s rich – who on some measures have got wealthier while many lower income citizens have suffered hardship in the crisis – should pay more to plug the gap.

Some wealth managers and economists speculate the government could look to raise money via tax hikes on savings, capital gains, Value Added Tax (VAT) or property, although the banker had not been provided with any detail on the exact policies under review.

“[The government] is reaching out. Have decisions already been made before this? I would hope not. I hope the reaching out is bona fide and there’s a willingness to listen and for dialogue and to change position if necessary,” the banker said.

Other bankers said the government was keen to encourage clients to buy government bonds or channel more equity into company startups that might otherwise struggle to find funding.

While the government engages often with the banking industry – particularly in the current crisis including over state-backed loans delivered by banks – it is unusual for officials to consult private bankers on policy matters.

A Treasury spokesman said: “The Government keeps all aspects of the tax system under review; as we exit the current crisis, we will take stock of the economy and public finances and make the right decisions at that point.”

LOCKDOWN RESTRICTIONS

Britons have been forced to rein in spending due to lockdown restrictions on travel, dining out and shopping.

Story continues below advertisement

An analysis last month by think-tank New Policy Institute found households had cut spending by £57 billion since the lockdown, with nearly half of the reduction – £23 billion – accounted for by the top fifth of households by income.

Finance minister Rishi Sunak’s next budget is scheduled for the autumn, although reports suggest some limited stimulus measures will be announced next month.

The governing Conservative Party has traditionally steered clear of fiscal policies that target wealthier Britons because of their historic backing of the party.

But with business unlikely to rebound quickly and international trade potentially stymied by Brexit, higher taxes on affluent citizens or the British assets of overseas investors are seen inevitable by some.

“I think there’s a realization that this has to be paid for and that we are probably going to have to shoulder the burden a bit more than others,” the banker said, when asked whether his clients had shared worries about tax hikes.

Sign up for the Coronavirus Update newsletter to read the day’s essential coronavirus news, features and explainers written by Globe reporters and editors.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies