UK bank stocks rose on Thursday following reports that Chancellor Rachel Reeves may exclude them from a planned budget tax hike. The Financial Times reported that the upcoming budget could spare Britain’s financial institutions from additional tax burdens, boosting investor confidence.

The FTSE 350 Banks Index surged 1.3% in early trading, outperforming the broadly flat FTSE 100 and FTSE 250 indices. Major UK banks including NatWest, Lloyds, Close Brothers, Standard Chartered, and Barclays saw shares rise between 1% and 2.7% by 08:11 GMT.

Analysts suggest that the government’s stance reflects an acknowledgment of the already high tax levels imposed on UK-based banks compared to international peers, as noted by individuals involved in the budget process and cited by the Financial Times.

The market shift highlights growing optimism within the UK banking sector ahead of the upcoming budget announcement.