Reeves set to spare bank sector from tax raid, shares rally

(Sharecast News) - UK bank shares rallied on Tuesday following a report that Chancellor Rachel Reeves is preparing to spare the sector from a tax raid in the Budget. According to the Financial Times, the Treasury has asked banks to make public and prominent endorsements of the Budget this week.

Sources told the FT that officials want lenders to praise new policies and show how they will boost lending to first-time buyers and small businesses.

The understanding is that banks should refrain from criticising the government's decisions, one of the sources said.

Banks had warned the Treasury they would curtail lending if Reeves hit them with higher taxes and had been lobbying for months to avoid such levies.

The effort appears to have been successful, people familiar with the planning for the Budget on Wednesday told the FT.

At 0850 GMT, shares in NatWest were up 3.2%, while Lloyds and Barclays were up 2.6% and 2.4% respectively.