Sadiq Khan has urged London’s biggest banks to keep investing in the UK, ahead of an expected tax raid on the sector in the upcoming Budget.

On Monday, the Mayor of London said the City’s banking sector is “really important” but refused to say whether he opposed the tax raid, adding that “those with broader shoulders carry the greatest burden”. 

Chancellor John Healey is expected to target the sector with a tax grab when he takes to the despatch box on Wednesday.

A hike to the UK banking surcharge, which sits on top of corporation tax, is expected to be one of the Budget’s largest revenue-raisers. The surcharge currently sits at three per cent, taking banks’ total corporation tax rate to 28 per cent, but raising it to eight per cent is expected to raise about £2bn.

The Chancellor has been cautioned that a raid on banks could threaten the City’s global status. Jamie Dimon, chief executive of JP Morgan, has previously warned that higher taxes could make him “reconsider” building his bank’s new megatower in Canary Wharf.

But the Mayor urged banks not to scale back investment in London. He said: “The financial sector is really important to London. The City of London area is very important to London. 

“Hundreds of thousands of jobs are created in the financial sector, including the banks. I want them not just to stay here, but I want banks to come here as well.

“I’m really pleased that JP Morgan Chase are investing in a huge new building in Canary Wharf. We’ve seen Goldman Sachs move here, and others move here as well. That’s really important,” he added.

The Mayor’s office is among signatories of a memorandum of understanding that paves the way for JP Morgan to receive a sweeping business rates discount on its tower. The project is expected to pump £10bn into the local economy. 

The capital ‘could pay more tax’

This week’s Budget is expected to lay the groundwork for Andy Burnham’s pledge to drive growth in the UK’s regions, prompting concerns that London’s economic role could be overlooked.

But Khan believes London “could pay more” in tax. He said: “It’s not London versus the rest; it’s London with the rest as well. As a capital city, every year we contribute net between £40bn and £50bn. 

“I think we could do even more with the right support from the government. But I think our ecosystem relies upon everyone doing well in this city,” he added.

On Sunday night, Oxford Street was closed to traffic for the first time in its centuries-long history. Khan said City Hall’s longer project to rejuvenate the high street will boost flagship stores like John Lewis and drive out “dross” American candy shops. 

High street retailers say the business rates system unfairly taxes them compared with online shopping giants like Amazon, Shein and Temu. 

During his campaign to become Makerfield MP, Burnham said he would hike taxes on “out of town” warehouses to fund tax cuts for high street shops. 

Healey has since ruled out a tax raid on warehouses, after industry bosses warned that this would push up costs for retailers and end up in higher prices for shoppers.

But the Mayor of London said online retailers should pay more tax. He said: “It’s not a level playing field, and so I’m looking forward to the Chancellor addressing that.

“It can’t be right that you’ve got a shopkeeper having to pay business rates, rent, salaried staff, people to serve customers, and those who are warehouse retailers don’t,” the Mayor added.