Banks look to profit after Osborne’s Budget

Budget looks favourable to banks

Chancellor of the Exchequer, George Osborne’s first Budget looks to help the financial stricken banks. The cut in corporation tax from 28% to 24% for higher rate tax firms will help business save a lot of tax expenses. The banks in particular will benefit as it will help them return to higher profits, or even turn their losses into profits.

I feel this is a good decision by George Osborne, as it will help in the short term by helping business and banks find their feet again and hopefully this will see some stability in the financial sector. The only negative to this is that KPMG believe that the VAT rise from 17.5% to 20% will cost banks £500m. This could prove to be a tough balancing act played by Mr Osborne, by outweighing the loss in revenue of corporation tax, and the potential increase in revenue from VAT. I feel this decision could help in the short term, but in the long term it could affect the government’s finances, especially due to the 4% cut in the higher rate of corporation tax.

Below is the link to The Guardian article:

George Osborne’s tax changes good for banks, say analysts

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