Healey's first Budget is expected to hit banks with a profits tax raid that could push up mortgage costs

Chancellor John Healey is reportedly weighing a rise in the bank surcharge on profits above £100m from 3% to 8%, worth £2.2bn. City analysts expect a smaller 2% rise raising about £800m a year. Industry body UK Finance warns a higher tax could shrink credit supply by £17.5bn over a decade. The Budget is due on Wednesday 28 October.

The surcharge stood at 8% until it was cut to 3% in 2023.

Barclays posted £2.3bn third-quarter profits and is cutting 5,000 jobs.

Healey says he wants to back 'bloody-minded' entrepreneurs who turn a profit.