The bank levy announced by the Chancellor in his emergency 2010 Budget must not prevent UK banks from competing internationally, the British Bankers' Association has urged.

The BBA said the UK is a trading nation and we must ensure bank taxes do not hurt national interests or provide an unfair advantage for other businesses operating here.

A spokesman for the BBA said in a statement: ''This levy is to apply to all major banks and building societies operating in the UK regardless of nationality.

'We are a large financial centre and a great many jobs are created here as a result. The industry does business globally but pays its taxes in Britain. The UK is not the only country creating some form of bank levy.

'Bank levies need to be co-ordinated internationally. It is essential that the international banks do not find themselves taxed multiple times for the same thing.'

The trade body added that the banking industry fully understands the part it must play in helping the UK's economic recovery:

'We know this is a difficult Budget for everyone and the banking industry will work to meet its obligations in helping bring the economy back to strength.'

Chancellor George Osborne confirmed that the new bank levy is to be introduced from January 2011 in today’s Budget. 

He said he would introduce a bank levy from January 2011 which will be imposed on UK banks, building societies and UK operations of foreign banks.

The chancellor said this will generate around £2 billion in revenue a year.  Osborne noted that some commentators had favoured waiting until all countries in the G20 introduce a bank levy. 

However, the chancellor added that waiting until this happened wouldn't be right or fair, adding, 'Banks should make a fair contribution to the risk they pose.’