FTSE 100 LIVE: Markets down and banks sell off as think-tank calls for windfall tax on banks to raise billions

The FTSE 100 (^FTSE) and European indices were lower in early trade on Friday, as an influential think-tank released a report positing the idea that chancellor Rachel Reeves could look to bolster public coffers with a new windfall tax on banks.

Reeves should tax bank windfalls to recover taxpayer money spent on compensating losses from the Bank of England’s cash-printing drive, the Institute for Public Policy Research (IPPR) said.

Hiking a levy on the profits from major firms such as Barclays (BARC.L), Lloyds (LLOY.L), HSBC (HSBC) and NatWest (NWG.L) could raise up to £8bn a year for public services, the report said.

The think-tank argues the UK is an international outlier in having its Treasury pay for central bank losses on its bond-buying quantitative easing (QE) programme.

After a period of making profits on this programme, the Bank of England is facing record losses, estimated to cost the taxpayer £22bn a year, as interest rates have risen since 2021, it warned.

This money is then partly being funnelled to bank shareholders due to a “flawed” policy design, boosting profits while millions across Britain continue to face cost-of-living pressures, the report says.

Traders are also looking to the US PCE reading later on for clues on the health of the economy. US stock futures were lower on Friday morning in European trading hours.

The FTSE 100 (^FTSE) dipped 0.1% in early trade. Banking and financial stocks led the charge lower, with top fallers NatWest (NWG.L), Lloyds (LLOY.L), Barclays (BARC.L) and HSBC (HSBA.L) as markets opened. The DAX (^GDAXI) in Germany also lost 0.1%. The CAC 40 (^FCHI) in Paris was 0.2% lower. The pan-European STOXX 600 (^STOXX) was 0.1% in the red.

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33 mins ago

Lucy Harley-McKeown

Here's the US stock futures chart

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Advanced Chart 34 mins ago

Lucy Harley-McKeown

US stock futures lower as traders look to US inflation data

Our US team writes:

US stock futures sunk below the flatline as Wall Street readied for new data on inflation following a record-breaking day for markets.

Futures attached to the benchmark S&P 500 (ES=F) slipped 0.1%, while contracts on the tech-heavy Nasdaq 100 (NQ=F) and the Dow Jones Industrial Average (YM=F) dropped 0.2%.

Stocks rose on Thursday, lifting the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) to new highs. Investors cheeredsigns of a resilient economy even as President Trump's effort to oust Federal Reserve governor Lisa Cook took a new turn.

Now, Wall Street is bracing for fresh insight on the chance of a rate cut, with the July reading of the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, set to land Friday at 8:30 am ET. 38 mins ago

Lucy Harley-McKeown

Good morning!

Hello from rainy London. It's the final trading day of a slow August and we've got some data coming up, including:

Property Transactions in the United Kingdom US Advance Economic Indicators Offshore Energies UK economic report World Renewable Energy Congress US Personal Consumption Expenditure (PCE) index

Earnings season has mostly rounded off, but these companies are left to report:

Cosco Shipping (CICOF) and SAIC Motor (600104.SS) (600104.SS), Frontline (FRO)

Let's get to it.

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