The financial services sector paid £71.4billion in tax last year – that’s 11.5% of the total bill for the UK.
The figure was disclosed as ministers told banking and insurance chiefs that there will be no special deal for the City in the Brexit negotiations.
The battle between so-called hard and soft Brexit has put the financial services institutions of Canary Wharf and the City on a collision course with the Government.
Bankers want to maintain access to the European market, maintaining the present “passporting” arrangements, but it is believe that would require concessions that ministers would be unable to accept.
Now the accountancy giant PwC has revealed the stakes at play with nearly a quarter of financial services’ turnover in the last financial year going “straight to the public coffers”.
This is the sector highest tax total in the report’s nine year history, thanks to a bank levy which cost the sector £3.4billion.
Mark Boleat, policy chairman for the City of London , said: “These new findings not only demonstrate the significant contribution made to Government revenues, but are also key in helping us to understand the potential impact of Brexit on different sub-sectors within financial services.
“The sector arguably stands most to lose as negotiations loom.
“It makes it clear the argument that Government should be engaging with firms as it approaches talks with the remaining EU 27, and the pulling of the political trigger.”
Despite worries about rivals such as Dublin, Frankfurt and Paris taking work away from the financial hub, there is a general air of confidence among financial services executives that London has sufficient qualities to ride out the storm. According to a survey, 72% said they saw London as top dog in five years’ time.
Meanwhile Chancellor Philip Hammond and Brexit secretary David Davis met with sector leaders at The Shard to shoot down talk of special deals.
One of the 10 people present told the Daily Telegraph : “There was quite a blunt warning that politically the Government does not want to be seen to do a deal to favour rich bankers, if it doesn’t comply with Brexit voters’ wishes – that there is more to the negotiation that just the City.”
Mr Davis indicated that measures would be put in place to maintain the flow of foreign talent
In a joint statement, Mr Hammond and Mr Davis said: “We want the best deal for trade in UK goods and services, including our world-leading financial services industry. That is why these meetings, where we listen closely to the sector’s views on the potential impact and opportunities offered by us leaving the EU, are so important.
“Our financial services sector makes a crucial contribution to our economy and we will work together to ensure it continues as the hub for both Europe and the rest of the world.”