The head of Britain’s main banking lobby group has warned the chancellor against a budget raid on the industry, arguing that it would undermine her aim of delivering sustainable economic growth.

In a letter to Rachel Reeves seen by Sky News, David Postings, the chief executive of UK Finance, said renewed speculation about increases to banks’ tax burden risked undermining their international competitiveness.

Mr Postings’ letter was sent earlier this week, just days after shares in the largest UK banks – including Barclays, Lloyds Banking Group and NatWest Group – slid amid fears of a renewed tax raid on the sector.

“Both the financial services sector and the wider investor community have… strongly welcomed your clear emphasis – most recently through the Leeds Reforms – on ensuring that the UK’s financial services sector has the right environment to be internationally competitive,” he told the chancellor.

“As you said in launching those reforms, it is vital to deliver certainty for banks operating here and ensure that UK banks can compete internationally and drive economic growth.

A report published last week by the Institute for Public Policy Research (IPPR) think-tank proposed that the chancellor use her November budget to impose an additional levy on bank profits – prompting an investor sell-off of shares in the main UK lenders.

Anxiety about higher personal and corporate taxes has gained momentum in recent weeks because of the weak outlook for the public finances, with Ms Reeves needing to fill a multibillion pound black hole to ensure the government meets its own fiscal rules.

Treasury insiders have sought to play down the prospects of such a move during private discussions with bank executives in recent days, but the timing of Mr Postings’ letter underlines the heightened anxiety in the sector following the sharp recovery in its profitability in recent years.

“As many of our members have recently noted, efforts to boost the UK economy and foster a strong financial services sector would not be consistent with further tax rises on the sector, which already makes a substantial contribution to the public finances,” Mr Postings wrote.

“The emphasis should be on continuing to implement an agenda of regulatory reform that allows for an appropriate adjustment in risk appetite.”

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Mr Postings denied that the recovery in bank profitability was unreasonable, saying: “UK banks’ net interest margins have only returned to historically more normal levels and are far from excessive.”

He added that the industry had made a record tax contribution of approximately £45bn last year.

“UK Finance analysis shows that the UK’s total tax rate for model corporate and investment banks is already notably higher than other major financial centres such as Amsterdam, Frankfurt, Dublin, and New York,” Mr Postings told Ms Reeves.

“This disparity is driven by the permanence of sector-specific taxes in the UK, unlike in other EU jurisdictions where comparable arrangements have been phased out.”

He added that a further tax on the banking industry “would run counter to the government’s aim of supporting the financial services sector and make the UK less competitive internationally, potentially driving capital and investment to other jurisdictions”.

“It would also risk undermining the sector’s ability to drive growth, innovation, and productivity across the UK economy.

“A pro-growth, stable operating environment is the best way to deliver strong and sustainable tax revenues, retain talent and underpin investment across the economy.”

UK Finance declined to comment further on the letter when contacted by Sky News.

The leader of Britain’s trade unions has urged Labour to fight Reform UK by hitting millionaires, banks and gambling with higher taxes.

Paul Nowak, general secretary of the TUC, has published an opinion poll of 5,000 adults.

He says the results suggest a significant number of Labour voters are leaning to Reform.

His call comes ahead of the TUC’s annual conference starting in Brighton this weekend, when the high-tax policy is expected to be overwhelmingly approved.

“I’ve seen first-hand the experience of the wealth tax, the solidarity tax in Spain and it raised billions of euros,” Mr Nowak said in a pre-conference interview with Sky News.

“It didn’t lead to an exodus of millionaires or wealthy people from Spain and Spain now has one of the fastest growing economies in the OECD. So I think it’s a good example of a wealth tax in action.

“But it’s not the only option the government has. They could equalise capital gains tax with income tax.

“They could have a windfall tax on the banks and the financial institutions who have got record profits.

“And they could tax the gambling industry much more fairly.”

He continued: “The big four banks between them had profits of nearly £46bn last year alone, mainly because we’re in a high interest rates environment.

“Under the previous Conservative government, when the energy companies had huge windfall profits, they moved to a windfall tax, extended by Labour.

“We think they should take a similar approach in banking and other sectors where we may see those windfall profits.”

Labour voters ‘leaning to Reform’

The debate over a wealth tax was triggered by a call by former Labour leader Lord Kinnock, in an interview on Sunday Morning With Trevor Phillips on Sky News on 6 July, for a 2% levy on people with assets of more than £10m.

Weeks later, it was backed by Labour’s former shadow chancellor, Anneliese Dodds, on Sky News political editor Beth Rigby‘s Electoral Dysfunction podcast, but rejected by Chancellor Rachel Reeves.

Ms Reeves will deliver the budget on 26 November.

On the TUC’s poll, carried out on 15-19 August, Mr Nowak said 74% of 2024 Labour voters who are now “leaning to Reform” backed wealth, gambling, and bank taxes.

This was also true for 84% of 2024 Conservative to Labour switchers.

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‘A clear dividing line’

“We polled the public on a 2% wealth tax on those with assets of more than £10m,” Mr Nowak said. “Most people would recognise, if you’ve got £10m in assets, you could probably afford to pay a little bit more in tax.

“This is a clear dividing line between the government and Reform, showing you are on the side of working people.

“We know some [union] members voted for Reform at the last general election and clearly Reform was the biggest party at the local elections and union members would have been among those who cast their vote for Reform.

“My job isn’t to tell trade union members which way they should vote or not. What we want to do is expose the gap between what Nigel Farage says and what he does.

“He says he stands up for working people and then votes against rights for millions of working people when it’s introduced in parliament.

“He says he stands up for British industry and supports Donald Trump and his destructive tariffs. And he talks about tax cuts for the rich when we know that we need those with the broader shoulders to pay their fair share.”

Fashion giant Shein has opened an investigation after a shirt was advertised on its site, modelled by a man bearing a striking resemblance to Luigi Mangione, who is accused of murdering a US healthcare chief executive.

The image with Mangione’s likeness, wearing a white, short-sleeved shirt, has since been taken down.

Shein, one of the world’s biggest fast fashion retailers, told Sky News: “The image in question was provided by a third-party vendor and was removed immediately upon discovery.

“We have stringent standards for all listings on our platform. We are conducting a thorough investigation, strengthening our monitoring processes, and will take appropriate action against the vendor in line with our policies.”

The listing was taken down on Wednesday afternoon, according to reports.

As news of the image spread across social media on Tuesday, and ‘Luigi Mangione Shein’ reportedly began trending, many speculated that the picture had been created by AI or photo-shopped.

Some supporters of Mangione accused Shein of using his likeness, while his critics have also described using the photo as a new low.

Mangione, 27, is facing trial for fatally shooting UnitedHealth’s insurance CEO, Brian Thompson, outside a New York City hotel in December.

Mr Thompson, 50, was shot dead as he walked to a Manhattan hotel where the company, the largest private health insurance firm in the US, was hosting an investor conference.

Mangione denies the state and federal charges against him, including first-degree murder “in furtherance of an act of terrorism”, two counts of second-degree murder, two counts of stalking and a firearms offence.

Prosecutors are seeking the death penalty if he is convicted, saying Mangione targeted Mr Thompson and that he “presents a future danger because he expressed an intent to target an entire industry, and rally political and social opposition to that industry, by engaging in an act of lethal violence”.

After the killing, Mangione was portrayed as a folk hero by some of those opposed to the US healthcare system.

Rallies took place outside court during his appearances and some supporters pledged funds to his defence.

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Shein, founded in China in 2012, has built its global reputation on inexpensive, fast-moving fashion trends that attract Gen Z and younger millennials. Its products are shipped to more than 100 countries.

In January, a senior company lawyer was unable to say if the company sells products containing cotton from Xinjiang, the region of China where it’s alleged members of the Uyghur ethnic group are forced to work against their will, accusations China denies.

Sky News has contacted Shein for comment.