Banks seen as the most likely target for tax rises in Budget, LCP industry poll finds

An industry poll during LCP's latest macroeconomic and investment views webinar found that bank taxes were seen as the most likely target for tax increases in the Chancellor's Budget on 28 October, selected by 64% of respondents.

The webinar focused on the global economic outlook, key themes shaping investment markets, and opportunities across different asset classes. Respondents, including investment professionals and long-term investors, were asked to identify one or more areas they believed could be targeted for tax increases. Aside from bank taxes, respondents also selected energy company taxes (47%) and taxes on high-value residential properties (47%) as potential areas for increases. However, few respondents anticipate increases in VAT (11%) or income tax (8%), reflecting faith in the Labour Party’s 2024 manifesto commitment not to increase those taxes.

These findings come as investors navigate the wider economic consequences of geopolitical instability. Despite ongoing tensions in the Middle East driving higher oil prices and inflationary pressures, the Bank of England has maintained a wait-and-see approach, keeping interest rates at 3.75%.

This challenging backdrop was reflected in a separate poll conducted during the webinar on the biggest risks facing the global economy over the next 12-24 months. Respondents were again able to select more than one option. Geopolitical tensions and conflict emerged as the top concern, selected by 80% of respondents, followed by government debt and fiscal sustainability (50%), financial market instability (37%) and inflation and interest rates (35%).

Despite the challenging environment, LCP's experts also explored potential opportunities for investors. Higher bond yields have improved the appeal of global fixed income, with bonds once again offering a more attractive risk / return trade off income.

The webinar also highlighted opportunities beyond the narrow group of AI-related companies that have dominated recent equity market returns. Areas such as UK equities, selected emerging markets and infrastructure assets may offer attractive diversification benefits and more compelling valuations, particularly for investors seeking broader exposure and alternative sources of return.