The boss of HSBC has warned Rachel Reeves that a punishing new tax raid will deliver a hammer blow to the UK economy.

Georges Elhedery, the bank’s cost-cutting chief executive, said piling extra taxes on the bank risked “eroding” its investment in Britain, which includes lending £220bn in mortgages and business loans every year as well as employing 18,500 staff.

“Banks in the UK are probably subject to the highest level of taxation among all major jurisdictions,” he said. “The additional taxation on banks does run the risk of eroding our continued investment capacity in the business and in supporting our customers, and ultimately in delivering growth for the UK.”

The Lebanese banker, who took over as HSBC’s chief last September, said banks already faced an array of levies, including the banking surcharge and bank levy.

According to research by PwC, taxes on UK banks are higher than anywhere else in Europe or the US at 45.8pc, compared to 28.8pc in Dublin and 27.9pc in New York.

HSBC is currently the UK’s largest bank by profits, making it one of the country’s biggest corporate taxpayers. Its UK arm forked out £1.5bn in corporation tax last year.

Mr Elhedery’s comments come amid speculation that Ms Reeves could impose new levies on lenders in her autumn Budget as she pushes to fill a black hole in Britain’s public finances.

The Chancellor is also mounting pressure to raise more tax revenue after the Office for Budget Responsibility this month warned the UK’s public spending plans are “unsustainable”.

In response to speculation around a possible raid, the bosses of Barclays and Lloyds have both separately warned Ms Reeves against raising taxes on banks.

HSBC is Britain’s largest bank but makes most of its money in Hong Kong and China – leaving it facing a difficult balancing act, placating Western politicians and Beijing.

Mr Elhedery spoke on Wednesday after HSBC reported a 30pc drop in its profits because of a $2.1bn (£1.6bn) hit from Chinese lender Bank of Communications (BoCom), in which it owns a 16pc stake.

The write-down was linked to a major recapitalisation of the bank by the Chinese government in June amid a move by Beijing to prop up the faltering economy. It follows a $3bn impairment HSBC took on the BoCom last February.

The HSBC boss added that an “oversupply” of offices in Hong Kong had led to defaults on commercial real estate loans. The defaults saw HSBC report a 57pc increase in the sums it expects to lose on bad loans, to $1.1bn.

The bank has previously been accused of closing the accounts of pro-democracy dissidents in Hong Kong, a claim HSBC has rebutted by saying it must follow local laws.

On Wednesday, shares in the group fell 5.1pc to 921p, the most since April 7, with analysts at Citi saying gloomy investors were sceptical about HSBC because of global trade wars and trouble in China.

“The common pushback we receive is ‘why do I need to own this stock?’ based on various risk factors (like tariffs),” they said.

Donald Trump’s trade policies are a key danger for the bank, with tariffs set to hit global activity. Mr Elhedery attempted to shrug off the threat, saying they would have a “relatively modest impact” on revenues.

HSBC’s costs also increased 10pc to $8.9bn as the bank invested in artificial intelligence technologies and pushed ahead with a wide-ranging overhaul that will see it split into two separate Eastern and Western divisions.

Mr Elhedery is tasked with leading the overhaul of the 160-year old bank that comes as HSBC faces mounting pressure from its largest shareholder Ping An, to spin off its Asian business completely.

Speaking on the revamp, Mr Elhedery said: “We’re making positive progress in becoming a simple, more agile, focused organisation built on our core strengths.”

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