Hunt Says UK Banks Too Slow to Raise Interest Rates for Savers

Chancellor of the Exchequer Jeremy Hunt said Britain’s banks are being too slow to pass interest rate increases on to savers, an issue he raised with finance CEOs at a round table last week.

(Bloomberg) — Chancellor of the Exchequer Jeremy Hunt said Britain’s banks are being too slow to pass interest rate increases on to savers, an issue he raised with finance CEOs at a round table last week.

“One thing that can definitely happen better than it is now is passing on increases in the base rate,” Hunt said in the House of Commons on Monday. “It is taking too long.”

Hunt and Prime Minister Rishi Sunak are trying to put pressure on lenders to ensure they’re passing on changes in interest rates as quickly to savers as they are doing to mortgage holders and other borrowers. The chancellor on Wednesday is due to meet with the Financial Conduct Authority and other regulators as ministers try to find ways to help Britons cope with a cost-of living squeeze without increasing government spending and by instead pressuring companies to pass on lower costs to consumers.

Bloomberg Intelligence calculated in May that about 40% of the rate rises have been passed on by UK lenders to savers since rates started to rise in late 2021. The analysis was carried out before the latest 50-basis-point rise and using deposit data for March.

Hunt met last week with the UK’s largest lenders, including HSBC Holdings Plc, Barclays Plc and NatWest Group Plc, and they agreed easements to help mortgage-holders after the Bank of England increased its benchmark interest rate to 5%.

Some MPs in the opposition Labour Party have called for Hunt to apply a windfall tax on banks’ profits to help fund extra support for homeowners. But asked about that prospect on Monday, Hunt batted the question away, pointing out that banks already pay a surcharge on their profits.

“They pay 3% more than everyone else, as well as a levy on their balance sheets,” he said.

–With assistance from Tom Metcalf and Tomasz Noetzel.

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