Government levies an extra £800m

Chancellor George Osborne has announced he is increasing the levy on banks to £2.5bn, raising an extra £800m.

The government initially ann-ounced that a reduced rate of 0.05% would apply in 2011.

But the government no longer considers this necessary.

Therefore, from March 1 the rate of the levy will be 0.1% for two months – to offset the lower rate of 0.05% that was charged in January and February – before moving to 0.075%.

The Bank of England recently noted that the near-term outlook and resilience of the UK banking sector has improved.

It says markets now have cert-ainty over the timing and direction of regulatory change, with the Basel III regulatory reforms not being introduced until 2013 at the earliest and including extended transition periods.