The boss of JPMorgan Chase approved plans for a new £3bn tower in London after a senior adviser to the UK prime minister travelled to New York to reassure the bank over the government’s pro-business stance, it has emerged.
The Wall Street bank, which along with Goldman Sachs announced substantial investment plans in the UK hours after they were spared tax increases in Rachel Reeves’s autumn budget, only signed off on the plan for its new UK headquarters last Friday.
This followed a trip to the US by Varun Chandra, Keir Starmer’s business envoy, to meet Jamie Dimon, the chair and chief executive of JPMorgan Chase, according to the Financial Times.
The visit came days before the chancellor announced £26bn in tax rises in a budget that did not impose higher levies on banks, after furious lobbying by the sector.
The Treasury had not decided whether or not to increase taxes on banks when Chandra flew to New York, according to the Financial Times. Reports emerged this week that the Treasury had asked the banking sector to issue supportive statements about the budget.
On Thursday morning, JP Morgan revealed plans to build a 3m sq ft tower in Canary Wharf, which will serve as its new UK headquarters and house more than half of its 23,000 UK staff, stressing that the project would depend on “a continuing positive business environment in the UK”.
A UK official quoted by the Financial Times said: “The investment … would probably not have been [announced] if this budget had been seen as anti-prosperity and anti-financial services. Dimon would not have been very positive.”
A source familiar with JP Morgan’s building plans said the decision to invest was “based on multiple factors and no one could know whether banks were going to be taxed before the budget”.
Dimon said the “UK government’s priority of economic growth has been a critical factor in helping us make this decision”.
In a release announcing the new tower, Reeves said she was thrilled JP Morgan had chosen the capital for the development, describing it as a “multibillion-pound vote of confidence in the UK economy”.
The bank has said the project could bring £9.9bn to the UK economy over the next six years.
Chandra’s visit is understood to have been linked to a British embassy event, a birthday celebration in honour of King Charles, which was hosted by JP Morgan. It is understood not to have been directly for a meeting with Dimon. The monarch was not in attendance.
A source close to JP Morgan said on Wednesday that the bank had been working on the announcement for months, and that the investment in a new headquarters was a long-term decision rather than related to any individual budget. With markets on Wall Street closed for Thanksgiving, the bank had a quieter period to make the announcement, they added.
The Treasury had considered increasing the bank levy in the UK, as it looked at ways to raise revenues after deciding against increasing income tax rates, but ultimately opted not to do so.
Banks in the UK pay a 28% corporation tax rate, higher than the standard 25%, as well as a separate levy on their UK balance sheets.
Goldman Sachs announced that it would expand its Birmingham office and hire 500 staff, in a move that would more than double its workforce in the UK’s second-largest city.
Calls for a new tax raid on lenders were raised in August in a paper by the Institute for Public Policy Research thinktank, which calculated such a move could raise as much as £8bn.
The report called on Reeves to levy a tax on the big banks to help to recover the “windfalls” they received as a result of the emergency economic policy known as quantitative easing, which was implemented by the Bank of England after the 2008 financial crisis.
Speculation about a windfall tax on large banks spooked investors, triggering a sharp sell-off of banking shares and prompting the industry to lobby against higher taxes for the sector.
Among those to call for a rethink on taxing banks was CS Venkatakrishnan, the chief executive of Barclays, who said the government should instead limit public sector pay rises to help curb wage inflation.
JP Morgan declined to comment. The government has been approached for comment.
