The International Monetary Fund has urged John Healey to target savings on pensions and welfare, instead of taxing Britain’s banks at the budget later this month.

Helge Berger, deputy director of the IMF’s European department, was asked about bank taxes after the Guardian revealed Healey plans to tap the sector for additional revenue.

Berger replied that given the UK’s historically high tax-to-GDP ratio, it might be better to “put the emphasis” on cuts.

He said if additional tax revenue were needed, reforming property taxes or VAT might be a good place to start.

He added: “Ultimately, with taxes roughly at 40% of GDP – historically, for Britain, a high number – then of course balancing these measures on the fiscal [spending] side, doing a bit more there, makes good sense.”

As examples, he highlighted the pensions triple lock – which Labour has already said it will reform – and “better targeting [of] social benefits”, adding: “I think that’s where you would put the emphasis, rather than the tax that you mentioned.” Berger was speaking in Bangkok, where the IMF has held its annual meetings this week.

City lobbyists have been out in full force, warning the government that higher taxes could force banks to throttle lending, hitting the economy and even forcing some lenders to move jobs and operations abroad.

In a letter sent to Healey and copied to the prime minister, Andy Burnham, on 12 October, days before news of the planned tax hike broke, the chief executive of UK Finance, David Postings, shared research commissioned by the lobby group. It suggested that reversing Tory cuts to the bank surcharge – taking it back to 8% from 3% – would leave annual UK GDP £1.2bn lower in real terms by 2029-30 than it would have otherwise been.

He said it would also see banks issue fewer business loans and mortgages, with lending likely to be £10.4bn lower in 2029-2030 than if the surcharge was held at 3%.

“The UK’s banking sector already makes a vital contribution to the wider economy,” Postings’ letter said. “To sustain this vital contribution, the budget should avoid any increases in bank-specific taxes, as this would risk constraining the sector’s ability to lend and invest.

However, TUC analysis of HMRC corporate tax receipts shows the Treasury has already lost out on £6bn over the three years since the surcharge cut came into force in 2023.

At the same time, banks have been reporting strong profits, largely off the back of high interest rates, with bosses subsequently increasing banker bonus pots and handing billions of pounds to shareholders.

Collectively, the UK’s four largest lenders – HSBC, NatWest, Barclays and Lloyds – reported £29.2bn in profits over the first six months of the year, with almost half, £13.7bn, pledged to investors through dividends and share buybacks. Over the past five years, those banks have raked in £200bn in pre-tax profits.

Author and former banker Philip Augur said the banks were “enjoying boom conditions”, partly due to good management but partly due to economic conditions “not of their own making”. He said there was room for a “moderate increase in taxation” that would raise about £2bn to £3bn a year.

“The prime minister has said that the burden of taxation has to fall on those with the broader shoulders, and at the moment, it’s hard to think of a sector where the shoulders are much broader than the banking sector,” Augur told the BBC’s Today programme on Friday.

While banks could not expect interest rates benefits to continue forever, Augur said that banks – including those that were bailed out in the 2008 financial crisis – could not have it both ways. “Banking is cyclical, it’s true. But when it hits really rocky times it expects the taxpayer to bail them out,” Augur said. “When it hits boom times, it expects some kind of special treatment. Banks can’t be too big to fail and too big to tax.”

Some banks have threatened to pull investment, and potentially jobs, from the UK if it hikes taxes, with lobby groups noting smaller overall tax charges in rival financial centres like Frankfurt, Dublin and Amsterdam. Jamie Dimon, who heads up the largest bank in the US, JP Morgan, said in May that he could scrap plans for a new £3bn London headquarters if the UK government became hostile towards banks.

But Augur said the government needed to see past the bluster. “There seems to have been a coordinated campaign by the big international banks who have businesses in Britain,” JP Morgan, Citigroup, Santander, HSBC and others.

“But they always say this, [and] they rarely move,” he added. “I think that if the chancellor judges this right, with a moderate increase in taxation or some other form of getting money from the banks, then the business will remain in the UK.”