The relief inside London’s financial circles was obvious this week, and honestly, you could feel it in the air. After months of tension, Rachel Reeves’s budget handed banks a reprieve — and they wasted no time signalling their appreciation.
The celebrations hadn’t started in London, though. They began in New York, over beef and stilton pie and a strange mix of pomp and soft diplomacy.
A Toast in Manhattan Echoes Back to London
Just days before the UK budget, Jamie Dimon stood inside JP Morgan’s gleaming $3bn Manhattan headquarters raising a few glasses.
The team toasted “His majesty the king,” despite King Charles being nowhere near the skyscraper.
Varun Chandra, the prime minister’s envoy, was there, mingling with 400 guests.
One sentence summed up his mission: reassure Wall Street that Labour hadn’t turned cold on business.
This wasn’t a random cocktail crowd moment.
It turned out to be part of a much broader charm offensive.
Hours after banks escaped new taxes, Dimon unveiled plans to push ahead with a 279,000 sq metre tower in Canary Wharf.
He added a neat reminder too — the investment depended on a “continuing positive business environment.”
Why the City Suddenly Felt Heard Again
For months, financial companies had grown uneasy.
Labour’s pre-election outreach was warm, but the tone cooled after Reeves’s £40bn tax-raising 2024 budget.
Some senior voices in the sector were annoyed.
Norman Blackwell — former Lloyds chair and adviser in Thatcher’s era — didn’t mince words.
He argued Labour had talked up entrepreneurs before winning power, then turned on them.
He suggested business owners and wealthy individuals were slipping out of the UK because they felt unwelcome.
“Everything they have done in government has gone in the opposite direction,” he complained.
And that irritation built pressure.
Serious pressure.
How the Lobbying Machine Shifted Into High Gear
Reeves’s latest budget lifted taxes across multiple areas — except banking.
That carve-out didn’t happen by accident.
City players, many of whom felt spooked after last year’s fiscal tightening, had been pushing hard.
The mood was almost defensive at times, like officials trying to prove they hadn’t forgotten who fuels the Treasury.
The financial services sector didn’t get everything it wanted, but it got the biggest thing: certainty.
Or at least a promise of it.
A single sentence from a Treasury insider, slipped to reporters, summed up the vibe: “The City can’t be taken for granted.”
They meant it.
And the banks clearly believed it too — judging by the investment commitments starting to surface.
Why JP Morgan’s Tower Became a Symbol
The new 3m sq ft skyscraper planned for Canary Wharf isn’t just a piece of real estate.
It’s a signal, practically a billboard-sized one.
Here’s how insiders frame the decision in private conversations:
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Planning stability mattered more than short-term tax changes.
The bank wanted clarity for years ahead, not a one-off budget surprise.
Dimon used the moment to show goodwill — but also to set conditions.
Even so, the timing raised eyebrows in Westminster corridors.
One moment, banks avoid tax hikes; the next, a global giant reveals a flagship investment.
Some MPs whispered about political theatre.
Others shrugged and called it strategic reassurance.
A small paragraph slipped in here: political symbolism can move markets even when no one admits it.
The Political Risk Reeves Tries to Manage
Reeves is trying to play two audiences at once.
She needs business confidence to shore up investment, yet she must also convince voters she’s being fair.
It’s a tricky balancing act, and some economists argue the latest budget won’t boost growth much.
Blackwell, again, was blunt: “It’s a budget that takes the economy in the wrong direction.”
He wasn’t alone.
Several analysts said the measures felt more like stabilisation than ambition.
One short sentence here: investors like predictability, but voters like momentum.
The Treasury insists the moves are part of a longer rebuild.
Behind closed doors, aides stress they’re plotting a “steady climb,” even as critics say it feels more like treading water.
A Look at How the UK Banking Landscape Is Shifting
A small table helps show where things stand right now:
| Bank | Recent UK Move | Notes |
|---|---|---|
| JP Morgan | Green-lit new Canary Wharf tower | Linked to confidence after tax reprieve |
| Goldman Sachs | Expanding certain London operations | Quietly increasing headcount in advisory teams |
| Lloyds Banking Group | Called for clearer long-term business tax commitments | Leadership remains sceptical of overall growth strategy |
Goldman Sachs is also said to be increasing its UK presence.
Recruitment in key units picked up after the budget.
Industry sources say the City “breathed out” collectively.
Not quite a sigh of relief — more like a cautious exhale.
Some firms remain wary, remembering how unsteady the policy landscape felt last year.
But they now sense Reeves wants them onside, even if she won’t give them everything they want.
What Comes Next for Labour and the City
Financial centres can be fickle.
One wrong move, and capital goes quiet or leaves.
Reeves appears determined to avoid that.
She’s positioning Labour as steady-handed — pragmatic, even if critics call it uninspiring.
There’s a feeling she aims to rebuild relationships that frayed after the 2024 budget shock.
Senior advisers have been meeting CEOs, hosting quiet roundtables, asking them directly what spooks them.
One industry insider put it plainly in a call: “They’re trying really hard to get back in our good books.”
It sounded half amused, half relieved.
And it captured the entire moment better than any prepared statement possibly could.
