Finance
UK shares dip as banks weigh
Published by Global Banking & Finance Review®
Posted on August 29, 2025
2 min readLast updated: January 22, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on August 29, 2025
2 min readLast updated: January 22, 2026
UK shares dipped as banking stocks fell due to tax recommendations. FTSE 100 faced its largest weekly loss in months, while defense stocks provided support.
By Twesha Dikshit
(Reuters) -London equities edged lower on Friday, dragged down by heavyweight banking stocks after an independent think tank recommended taxing interest they receive from reserves held at the central bank.
The blue-chip FTSE 100 fell 0.4% by 0909 GMT, declining for a fourth consecutive day and was set for its biggest weekly loss in almost five months.
The Institute for Public Policy Research said taxes on the billions of pounds received by banks in interest would give finance minister Rachel Reeves more room to meet her fiscal rules.
"Reeves has a potentially very large black hole to fill as far as public finances are concerned as we move towards the autumn budget," said Fiona Cincotta, senior market analyst at City Index.
"It's not something that is conducive to a strong business environment in the UK, but I can see how it may be an attractive option for the Chancellor given her predicament and limited options."
Banking stocks, down 2.4%, were the biggest drag on the blue-chip index. NatWest and Lloyds fell 4.5% each while Barclays lost 3.7%.
Providing support, defence stocks rose after German Chancellor Friedrich Merz said it seemed clear that there would be no meeting between Russia and Ukraine's leaders.
Rolls-Royce and Babcock added 1.6% and 1.3%, respectively.
The domestically-focussed midcap index was down 0.6% and set for its first monthly loss in five months.
Luxury fashion group Burberry fell 2.2% on the midcap index and weighed on the personal goods index. Watches of Switzerland was down 1.9%.
The FTSE 100 had touched a record high last week, tracking global markets after U.S. Federal Reserve Chair Jerome Powell signalled a possible interest rate cut at the central bank's September meeting.
However, concerns over the Fed's independence have pressured markets this week. Investors will track a key U.S. inflation data report and euro zone data later in the day for monetary policy outlook hints on both sides of the Atlantic.
(Reporting by Twesha Dikshit; Editing by Mrigank Dhaniwala)
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, reflecting the performance of the UK equity market.
Monetary policy is the process by which a central bank manages the money supply and interest rates to achieve specific economic objectives, such as controlling inflation and stabilizing currency.
Banking stocks are shares of publicly traded banks and financial institutions. Their performance is often influenced by interest rates, economic conditions, and regulatory changes.
A tax recommendation is a suggestion made by financial analysts or think tanks regarding how tax policies should be structured or modified to improve economic conditions or public finances.
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