Jamie Dimon has fired the bluntest warning shot yet at Westminster, signalling that JPMorgan Chase will walk away from its planned multibillion-pound Canary Wharf skyscraper if the political weather in Britain turns colder for the banking industry.
Speaking to Bloomberg TV on Tuesday, the chairman and chief executive of America’s largest bank said the lender would “reconsider” the project should its UK tax bill climb “too much”, a pointed intervention as speculation grows in the City that Sir Keir Starmer’s premiership is vulnerable and that a successor government could lurch leftwards.
“Not political instability, but if they become hostile to banks again, yes,” Dimon told the broadcaster when asked whether the febrile mood in Westminster was giving him pause. “I’ve always objected to the fact, we didn’t damage the UK in any way, we paid probably $10 billion in extra taxes by now. I don’t think that’s right or fair. If that happens too much we will reconsider.”
The proposed tower, which would span roughly three million square feet and accommodate up to 12,000 staff, was unveiled the day after Rachel Reeves delivered her latest Budget. The chancellor opted against raising taxes on banks after intensive lobbying by the industry, a decision that JPMorgan rewarded with one of the most consequential corporate property announcements London has seen in a generation.
Were it built, the skyscraper would rank among the largest office buildings in Europe. JPMorgan has put the construction-phase boost to the local economy at £9.9 billion, while the Treasury has dangled a business rates discount of “up to 100 per cent” to secure the investment. The bank, however, was careful to caveat its commitment at the time, stressing that the project remained “subject to a continuing positive business environment in the UK”.
Dimon’s latest remarks make plain what that small print really means.
Britain’s lenders are enjoying a profitable run. First-quarter results from the high street banks confirmed earnings continue to be flattered by higher-for-longer interest rates, themselves a consequence of the inflationary shock from the war in Iran. That combination, fat banking profits, squeezed household budgets and battered public finances, has long been a recipe for political appetite to raid the sector.
UK Finance, the industry’s lobbying arm, calculates that banks operating in Britain now shoulder the heaviest tax burden of any major financial centre, with an effective rate of 46.4 per cent last year against 27.9 per cent in New York and 38.9 per cent in Frankfurt. The numbers reflect a bank levy on balance sheets introduced in the 2010 emergency Budget after the financial crisis, layered with a corporation tax surcharge on profits brought in five years later.
CS Venkatakrishnan, the Barclays chief executive, captured the mood last month when he observed that “banks in the UK are more highly taxed than they are in other major jurisdictions.” Analysts at Jefferies told clients last week that they considered an increase in the bank surcharge to be “more likely than not”.
A retreat by JPMorgan from Canary Wharf would not simply leave a hole in the Docklands skyline. It would dent the supply chain of construction firms, fit-out specialists, security contractors, cleaners, caterers and software vendors that depend on big anchor tenants. It would also chill the broader signal sent to overseas investors weighing whether London remains, post-Brexit, a credible base for European headquarters, investors whose downstream spending touches thousands of British SMEs.
There is, equally, a financing dimension. Punitive levies on banks rarely stay confined to the banks themselves. They tend to manifest in tighter lending criteria, higher arrangement fees and a more cautious approach to small business credit, precisely the segment of the market that already complains loudest about access to capital.
Whether the warning lands depends on who occupies Number 10 by the autumn. Should Sir Keir survive, Treasury officials are likely to continue the delicate dance of squeezing revenue from elsewhere while keeping the City onside. Should he fall, his successor will inherit a fiscal hole, a restless backbench and an industry that, despite record profits, has become extraordinarily adept at signalling its mobility.
Dimon, who has spent the better part of two decades reminding politicians on both sides of the Atlantic that capital travels, has chosen his moment. JPMorgan’s tower is not merely a building. It is a bargaining chip, and the chancellor, whoever she or he turns out to be, has just been put on notice.
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JPMorgan threatens to scrap Canary Wharf skyscraper if Labour swings left on bank taxes