UBS analysts warned that a planned rise in the UK bank surcharge would push banks to pass costs on through higher mortgage rates and lower savings rates, worsening the cost-of-living squeeze. The average UK mortgage rate has already climbed from 4.9% before the outbreak of war in Iran to 5.88%, according to Moneyfacts. Chancellor John Healey is reportedly considering raising the surcharge on bank profits above £100m from 3% to 8%, and UBS estimates NatWest would face a £263m annual hit at a 6% rate. Shore Capital said Lloyds and NatWest would see earnings fall about 6% at an 8% surcharge, versus 2% at Barclays and 1% at HSBC. Bank shares fell on Friday, with Lloyds and NatWest both more than 2% lower.
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