The new £2.5 billion bank tax levy ….whilst this is good for the British taxpayer there are still questions about the support given to banks and how those banks pay for the support received.

No country can implement unilateral sanctions against the banks such as “capping bonuses” without risking those banks relocating to another country.  But clearly something has to be done to address the imbalance where in good times a bank creates vast profits for its executives and shareholders, and in bad times they get a safety net from the tax payer.

But there has to be a way, a way in which banks cannot rely on a tax payer safety net without there being huge financial consequences for them.  Perhaps only then will the banking system operate in a more risk adverse way so as to avoid melt down knowing that such a situation carries huge financial penalties.

As to banks lending to small and medium businesses this is a very difficult issue.  It is very difficult to force any bank to lend to a business that is considered a high risk, otherwise we end up back where we started, that is bad loans causing banks to fail.  But equally there has to be more focus on business lending, not all businesses are high risk.  Maybe one of the big issues for banks is the regulation now being applied for them to increase liquidity, such regulation is effectively a “brake” being applied to all lending.