It continues to be payback time for the banks. "The banks got support going into the crisis," said chancellor George Osborne at the dispatch box, "Now they must support the whole country as we recover from the crisis."
That support translates as an increased bank levy from 0.16 per cent to 0.21 per cent, which will return to the taxpayer an extra £875m a year for the sector, on average, by 2019/20. In addition, no longer will the banks be allowed to deduct from their corporation tax the compensation for mis-selling products such as payment protection insurance.
This had no large immediate repercussions for the banks' shares on the day, perhaps reflecting that further increase to the banking levy in particular had already been factored in. The sector was also buoyed by savings incentives such as improvements to Isas and the announcement that the first £1,000 of interest earned on savings will be tax-free.
The government further announced that it was to sell £13bn of the mortgages still held from its Northern Rock and Bradford and Bingley bailouts, as well as offloading at least a further £9bn worth of its Lloyds (LLOY) shares in the coming year. The company's shares recovered an initial drop following the chancellor's statement.
