Like a row of dominoes, the share prices of Britain’s biggest banks tumbled in unison on Friday, toppling one after another in a chain reaction started by a single tax proposal. The collective fall of NatWest, Lloyds, and Barclays erased £6.4 billion from the market, demonstrating the interconnected vulnerability of the sector.
The first domino was the IPPR thinktank’s report, which pushed the idea of a windfall tax on bank profits from quantitative easing. This immediately knocked into the second domino: investor sentiment, which turned from cautious to fearful.
This fear then toppled the share price of NatWest, the day’s biggest faller, which in turn seemed to drag down Lloyds, then Barclays, and then the wider sector. The synchronised plunge showed that investors were not differentiating between the banks, but were treating the tax as a systemic threat to all of them.
This domino effect highlights the danger of policies that target an entire industry. The shock is not absorbed by a single company but spreads rapidly through the system, creating widespread instability. The government now faces the task of trying to reset these dominoes and restore confidence before the chain reaction spreads any further.