Not for the first time, Jamie Dimon has showered outgoing UK finance minister Rachel Reeves with praise. In an interview with The Master Investor Podcast with Wilfred Frost released on 21 July, Dimon said that he thought Reeves "did a great job". Specifically, Reeves is credited with a commitment to medium-term fiscal prudence. That has helped to keep a lid on UK government bond yields.
Dimon declined to say what he might do if the new UK chancellor, John Healy increases the bank levy. Asked if that might lead Dimon to cancel plans to build a new £3bn UK headquarters in London, Dimon said: "I don't know what I'd do. I wouldn't make a binary decision like that."
Dimon added: "The new chancellor [is] going to need good policies that actually cause growth. So, I'm praying that they get policy right [as] government after government get it wrong."
Dimon is not however alone in warning the new chancellor of the possible consequences of a U-turn in terms of fiscal caution, with Nigel Green, predictably forthright, as noted below.
Dimon's warning about the risks of taxing banks is what you'd expect from the sector, and the argument makes sense, but if Burnham is poised to go into full crisis mode over the need to find more cash, his words might have little impact. Burnham will also be aware that, in the short-term at least, the policy is hardly a vote-loser, defenders for banks being few and far between. Given the importance of banking and associated services to government revenues however, he does need to think carefully about trying to squeeze more out of the sector.
Markets rallied recently on the assumption that a fiscally cautious figure would sit between Burnham and his own instincts on tax. This theory no longer holds.
Investors should reprice UK assets with that in mind.
Healey resigned from Cabinet last month demanding more money for defence and has pushed for spending to reach 3% of GDP by 2030. He now runs a Treasury under a Prime Minister who has ruled out raising income tax, VAT and National Insurance. That spending has to be funded somewhere, and wealth, capital gains and property are the obvious remaining options.
The UK lost an estimated 16,500 millionaires in 2025, one of the largest outflows recorded anywhere in the world, and forecasts already pointed to a further rise in 2026 before today's appointment.
A week of calm markets was built on the expectation of restraint at the Treasury. What arrived instead is a Chancellor with a spending record and a mandate, by Downing Street's own description, to execute rather than temper the Prime Minister's plans. That is a materially different risk picture than the one priced in on Friday.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
