The UK’s £2bn (€2.4bn) annual bank levy could have unintended consequences such as crippling lending to smaller corporate clients and complicating reform of financial regulation, industry consultants, trade bodies and lawyers warned today.

The tax on banks' balance sheets, announced earlier today by UK chancellor George Osborne in his emergency budget, will apply to UK banks and the UK operations of overseas banks. The levy will raise twice the Conservative Party's base line estimate in their manifesto, but less than the £5bn the Liberal Democrats said they wanted pre-election.