Chancellor to unveil details of bank levy

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George Osborne will set out legislation later on a long-anticipated levy on banks that the industry has lobbied heavily to minimise.

The Chancellor pledged on Wednesday to seek the "maximum sustainable" revenue from the finance sector, as he unveiled the harshest government spending cuts in decades.

He said that as part of moves to cut a record budget deficit, Britain would look to "extract the maximum sustainable tax revenues from financial services."

The finance sector is estimated to contribute around 10 per cent to UK's gross domestic product (GDP), and bankers have used this to lobby the government, saying too heavy a tax could ultimately harm the economy and drive top talent abroad.

Standard Chartered has warned that London may be losing its lustre as a financial capital due to excessive taxation, and bankers welcomed Mr Osborne's comments that he did not want to drive banks abroad.

"Decisions taken today will have an effect on the whole industry and in order to remain competitive, UK policies need to be in step with those elsewhere," the British Bankers Association said in a statement.

"Financial services currently contribute around £24 billion in taxes every year so we are pleased the Chancellor said he wishes to balance taxation with the attractiveness of the UK as a global financial centre and the need to retain jobs," added the BBA.